George grasps the nettle but we will all bear the pain

Tuesday, 22 June 2010 20:49 Dodgy dossier
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Our resident economist, Charlotte-Anne Schreiber, was in the press gallery of the House of Commons to hear the Chancellor of the Exchequer, George Osborne, deliver his Emergency Budget speech. Reactions among fellow journalists were mixed, but we are pleased to publish her, as usual, penetrating analysis. Please feel free to circulate her report among your colleagues.

The boy wonder surprised everyone in his first budget speech, but only succeeded in setting a multitude of conundrums and coalition compromises for the pundits to sort out. What are we economists and commentators to make of it? If Harriet Harman’s response is anything to go by, there will be fisticuffs ‘ere long, mark my words.

I wish I hadn’t said that. What are my words?

Well, let’s start by asking ourselves a simple question. ‘Is it a winning formula or a dog’s dinner?’  Or a dog's breakfast?

It is difficult to say at this stage, until the dust settles and we can all examine the minutiae of figures. George Osborne – GO for growth George as I like to call him - laid out his stall of goodies. And baddies. None of them are fully costed, but we know VAT is going up on January 4th. Is this date significant? A birthday or anniversary, perhaps? It’s a Tuesday. So look forward to early New Year sales, I say!

Mixed metaphors

You had to be on your toes to keep up with the metaphors, but what I liked was how politely GO asked everyone to contribute and then offered to share the rewards of success. Give us your taxes now to pay for the cost of gross irresponsible spending in the past and you can have it back with net interest later when we have dug ourselves out of the ruins of debt. [Wasn't it a mountain of debt? Or a shipwreck? - ed] Could be a con trick. So be careful, I say. Watch out.Politicians have a habit of saying one thing and meaning another. Remember Prudence? Once she was the fairy godmother. Now she’s the wicked witch. Keep hold of your wallet.

Now let’s try and be serious for a moment. The budget statement probably had more leaks than a tin of vichyssoise so there were few big surprises. In a nutshell, this was a budget of all the taxes. GO needs cash, lots of it to convince the big bad bond dealers we are as sound as a nine bob note. So, to get the bank balance nudging towards the black we are having a garage sale. Thatcher sold the family silver, Brown gave the gold away so now we have to fire sale the fixtures and fittings – things like the Tote, the Channel Tunnel rail link and other useless fripperies that we never should have indulged in.

Other important things to remember: we are going to accelerate growth but put our foot down on spending. It is hello to certainty and stability and goodbye to smoke and mirrors. We need to be progressive. Tough. Fair. And we are going to suffer cuts and bruises before we can expect care and comfort. It was farewell to welfare and goodbye to any hope of joining the Euro.

Banks to blame

And of course, one of the main reasons for the mess was the banks. So bend over and take a tax beating, you naughty boys.

But there were lots of other naughty boys who have got off scot free. What about all those greedy landlords, property speculators and nom doms? Business as usual for them. And talking of business, GO made a number of concessions to encourage new start-ups, especially north of Watford. [does she mean Watford Gap or Watford Junction? She should have checked - ed] And so, what can we make of it in the final analysis? When it comes to the crunch. Will the budget boost jobs or merely provide additional opportunities for the tax avoidance industry? Only time and tide will tell.

But what I can say is that George’s premier performance as CoE (that’s Chancellor of the Exchequer, of course, not Church of England) was so convincing that at one stage I thought Darling might get up to cross the floor of the House and throw his arms around Cameron and beg for forgiveness. Or is that a fantasy too far?

Personally, I think it is on the verge of being very middle-of-the-road. It was an austerity budget but there is a little jam for the poor and needy, and iron rations for the wealthy and greedy. So many benefits and budgets will be frozen that if nothing else this emergency budget must have a positive effect on global warming. GO could be brighter than we think!

All in all, at the end of the day, it was enough to make your head spin and reach for the drinks cabinet in the certain knowledge that at least there will be no extra duty on gin, and cider will be cheaper.

Do you know, the more I think about it the less I understand. I just hope George knows what he’s doing!

Charlotte-Anne Schreiber

Editor's comment: Ouch. This woman is beginning to worry me.

 

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