There are three fundamental flaws in Osborne's budget.
The first is the assumption that the UK will increase its growth when the Office for Budget Responsibility say that will not happen in the Eurozone and many other markets. I don't believe that, especially when UK investment rates are so low and productivity is only 80% of that of France as a result.
Second, there is the assumption that the next government can cut government spending at unprecedented rates, especially until 2018. I don't believe that.
And third there is the assumption that tax revenues from avoiders and evaders can be increased when staff are being slashed at HMRC. I don't believe that either.
Take those assumptions away and this budget makes no sense. And they are only assumptions, and all in areas where forecasting has, to be kind, been pretty poor in the past.
Osborne's budget has more holes in it than a Swiss cheese.
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“The first is the assumption that the UK will increase its growth when the Office for Budget Responsibility say that will not happen in the Eurozone and many other markets.”
Well it’s happening now. Growth in Europe is about 0 – 0.5% p.a. whereas in the UK it’s 2 – 2.5%, and that’s been the case for a year or so now.
“I don’t believe that, especially when UK investment rates are so low and productivity is only 80% of that of France as a result.”
I don’t normally pay too much attention to productivity. The best way to improve productivity is to sack people (as France, with unemployment above 10%, has long achieved).
Maybe you’re missing some points then
“I don’t normally pay too much attention to productivity”
That’s your problem right there.
As Paul Krugman said:
“Productivity isn’t everything, but in the long run it is almost everything. A country’s ability to improve its standard of living over time depends almost entirely on its ability to raise its output per worker”
Frustrating. Hiring HMRC staff must pay back many times the investment.
On Nwesnight yesterday, Evan Davies challenged the assumption that ‘Britain is paying its way’ and. I think, showed it was empty rhetoric.
Evan was good last night. He presented Gauke with a graph which showed the growth of the balance of payments deficit and challenged him to square that with “Britain is paying its way”. I guess that Paxman would have more aggressively pressed for an answer (which, of course, did not come), but then again Paxman is a tory, so perhaps not.
You have no faith in HMRC ability to clamp down on umbrella companies that bend the rules to breaking point then? Isn’t the perceived loss to the Treasury greater than even the HSBC scandal?
Probably, yes
My guess is that given how much of a chancer Osbourne is, it won’t be too hard for him to engineer half decent growth rates eg. 2 per cent per year for the next few years even if that growth is not accompanied by an increase in productivity as is the case now.
a) he can always use help to buy type measures to inflate house prices and use that as a driver of growth
b) relax planning laws to heat up construction.
c) relax pension investment laws to allow people to spend their pension pots
d) encourage overseas ‘investment’/spending into the UK.
As to whether such growth will filter through into the required tax revenue is unlikely.
But failing that, he will just continue to blame labour.
There are no flaws in Georges budget.
Getting the conservatives elected is the aim of the budget.
In George, we have never had a chancellor of the exchequer, we had, and have, a chancer of the exchequer.
A political chancer/chancellor.
The English public, fed on a diet of right-wing political diatribe by the totally-captured, as-free-as-a-prisoner, press, will hasten to the polls to elect Georges conservatives; Self proclaimed saviours of the free world (at 2300% APR).
Then they will spend the next 5 years wondering why they pay loads, get nothing, and their mortgage interest is at 5% when the bank rate is 0.5%.
Dumb.
And Dumber.
JohnM:- ‘Chancer of the Exchequer’ – I love it! You must very proud!
How about ‘Chance-seller’? Because not only is he selling chances for the financial sector to make a killing on the liberalisation of pension pots but he also selling the chances of a secure retirement and increasing the chance of increased social costs of pensions.
And that is my biggest concern at the moment – this business with pension pots. Once again, as a modern Thathcerite Tory through and through, here we have the Chance-seller bringing forward tomorrow’s money yet again under the guise of freedom and choice.
No doubt the injection of this cash into the economy will make it look more healthier than it really is whilst essentially pauperising future pensioners.
Also, shall we start to take bets now on how many fines and refunding scandals there will be in x year’s time that came about by the financial sector ‘creating markets’ for these pension pots?
What makes you think that the financial sector (well know for its main successes: establishing criminal enterprises) has not been planning this for some time?
It hardly seems the sort of thing George is capable of planning himself, so I consider it likely that it has been in the planning stage for some time, and has been rolled-out to further attract the grey voter. I can just imagine the the conversation:
“Hi guys, and George. Gotta great idea…we’ll let those with private pension pots,a dn buckets, take all their cash out. That’ll give you a useful dollop of cash to give to private health providers so they can move it to the Virgin isles. We can then persuade the old farts (sorry George, the Grey Voters) to invest it it BTLs’
Win-Win. We get the cash, you get the cash, they get assets we can repossess when we mess up again and crash the global economy”
And the dis-saving helps reduce the deficit as another blog today shows