In essence this was a budget which just reminds us all that Britain’s books will not be balanced by the next election. With the Eurozone sliding towards recession, all eyes remain on the Chancellor to protect the UK from the same downward direction. In order to avoid the prospect of a double dip, the UK has to be repositioned for business growth and George Osborne is hoping the British public will roll up their sleeves and create the stimulus needed to aid economic recovery. The financial benefits awarded to small businesses are welcomed but the concern remains that if the current plans for the economy continue to produce lack lustre results, there is no clear plan B in place.
All eyes are on now on the Chancellor meeting his revised forecasts for growth and debt deficit, as the mood of the country is that there is no room for further failure.
What we wanted to see from George Osborne was a clear focus on growth for the UK economy and progression on plans for reduction of the deficit – signs that the painful spending cuts were working.
News that economic growth for 2011 has been revised to 0.9% down from 1.7% the Chancellor predicted in his budget earlier this year is not reassuring news, but then neither was the announcement that borrowing figures had also been revised to a staggering £127bn for 2011-12. A bitter pill to swallow for Cameron who told us that we could not ‘borrow our way out of a crisis’.
The good news is that the focus for the Autumn Statement was on stimulating the economy, focusing heavily on infrastructure projects and easing the financial constraints which are choking businesses.
A credit scheme programme to underwrite up to £40bn in low-interest loans to small and medium sized firms has been introduced alongside a £1bn business partnership to help secure funding for medium-sized firms. Regional Growth regeneration fund is to get £1bn in extra funding and a £250m support package for energy-intensive firms.
£5bn will be spent on infrastructure spending including £1bn for the rail network. New rail link between Oxford, Bedford and Milton Keynes are promised to create 12,000 and jobs and much needed stimulus.
It all sounds promising, infrastructure and investment into business, essential in order to get ‘Britain Moving’ but this has to all be paid for and where is it coming from? Well it’s the public’s coffers again and £20bn from pension pots. All this perfectly timed to co-inside with the rise in the state pension age of 67 being brought forward to 2026, this may save an estimated £59bn but disrupting the retirement plans of workers.
Some revenue is to be clawed from Banks as the levy has been increased from the current 0.078% to 0.088% in January 2012. The public will be pleased to see that Banks are sharing some of the current financial pain however Osborne will need to tread carefully if he wishes to keep London as the home of global banks, if they are taxed too heavily then the concern is that they will leave. Bank share prices dropped on the news of the increased levy, RBS lost 0.6% to reach 19.08 pence per share, Lloyds lost 2.44% to reach 23.11p per share.
The ongoing housing problem is being tackled by a mortgage indemnity scheme which is set to help up to 100,000 people buy homes with a 5% deposit. This is being coupled with a 50% discount scheme to help social tenants buy their own homes with profits from sales to be ploughed back into new developments of social housing. The aim is that this scheme will kick start stalled construction projects in England.
The good news is that the planned 3p fuel duty in January has been deferred until August 2012, basic state pension is to rise by £5.30 to £107.45 per week and pension credit is going up by £5.35 per week. £1.2bn is to be spent on school buildings. Transport costs are to be capped, rise in regulated rail fares to be capped a 6.2% which will be applauded by commuters.