BUDGET BRIEFING J U LY 2 0 16
BEAM ME UP, OZZY “A Budget for The Next Generation.” That’s how George Osborne described the raft of new measures he outlined today amid fresh warnings that the global economic storm clouds are gathering. It wasn’t the bland Budget many were anticipating, fuelling speculation that today was as much about beaming the Chancellor up to Number 10 as helping the British people to live long and prosper. In a speech lasting over an hour, the Chancellor made some eye-catching announcements aimed at the voters of the future: a new “lifetime” ISA for the under-40s and a tax on sugary drinks to tackle child obesity, as well as the much trailed changes to school funding and status. The morning headlines will focus on these announcements, as well as the unexpected lifeline thrown to the North Sea by abolishing the petroleum tax. Mr Osborne hoped that all this would help to distract from the less promising growth forecasts outlined at the beginning of his statement. As expected, the Chancellor blamed the OBR’s revised growth and debt statistics on treacherous global headwinds – another reason, he argued, to stick to the Government’s long-term economic plan. So who were today’s big winners and losers? Looming elections in Scotland and Wales might have had something to do with the generous offering each received: City Deals for Edinburgh and Cardiff, Severn Bridge tolls slashed in half and a freeze on Scotch whisky duty. Small businesses are set to benefit from the abolition of business rates and a cut to commercial stamp duty, whilst the construction sector will be reassured by the green light given to big infrastructure projects and more house building.
On the losing side, pro-Brexit campaigners will be infuriated by the Chancellor’s use of figures dependent on Britain remaining inside the EU to predict future growth. The onus now will be on them to demonstrate how the British economy would survive Brexit. The Chancellor didn’t test his backbenchers’ patience too much, however, by resisting the temptation to hike fuel duty for the first time in six years. Back to the losers: local authorities are losing control of education as the Government moves to make every school an academy; and budget cuts look likely with the timely cut in business rates... just before they are devolved. For business, the headline measures around corporation tax, business rates and anti-tax avoidance will be of most interest. It was a mixed bag for big and small businesses with some obvious winners and losers, but the Chancellor’s commitment to infrastructure investment with HS3, Crossrail 2 and roads investment for the Northern Powerhouse is likely to be welcomed across the board. What did the Labour Party make of it all? There was the usual noise about public sector cuts and inequality, but they are yet to exploit the fact that the Chancellor has missed the mark on what he set out to achieve in the previous Government and “fix the roof while the sun was shining”. Labour have a limited period of time in which to do so, because if Mr Osborne does manage to balance the books, he will be heading into the next General Election boasting a formidable economic record.
Emily Poole, Account Director Emily is a consultant at Edelman who recently joined the team from the role of Special Adviser to the Secretary of State for Wales.
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