On the big picture of the economy the budget doesn’t move the dial. The OBR has not changed its forecasts for growth or employment in any meaningful way. The overall picture of a flat economy struggling to get any momentum on growth or jobs remains the same.
On the question of a growth plan, it seems the Government is coming down firmly against anything interventionist. If the Business Department has been waging an argument with the Treasury over this, they look to have lost. The view from the Chancellor is get the deficit down and get off businesses’ back. The is a limited – too limited view of Government’s role in a modern economy, but it is now the frame for this Government’s strategy.
The budget was mostly leaked in advance. The one part that wasn’t was the raid on pensioners. Ministers didn’t spot this coming and Tory MPs will learn all about the response when they go back to their constituencies this weekend.
Finally, the 50p rate. It’s hard to trust the numbers on this because of the behavioural change in wealthy people being able to shift dividend and other payments between tax years. But pre-announcing the abolition of the 50p rate has put in a huge incentive to shift income until after the change. Big assumptions are being made about behavioural change after the change which are no more than whistling in the wind.
The blunt fact is 300,000 people earning over £150,000 will be given a £10,000 tax cut while 300 households in my constituency will lose £3,800 per year due to cuts in tax credits unless they can find more hours to work. What that means is that any pretence of a changed or compassionate Conservatism has been killed stone dead by this budget.