{"id":14725,"date":"2012-03-21T17:48:51","date_gmt":"2012-03-21T17:48:51","guid":{"rendered":"http:\/\/www.taxresearch.org.uk\/Blog\/?p=14725"},"modified":"2012-03-21T17:48:51","modified_gmt":"2012-03-21T17:48:51","slug":"the-key-economic-assumptions-osborne-is-making-are-wrong-which-means-he-cant-balance-his-books","status":"publish","type":"post","link":"https:\/\/www.taxresearch.org.uk\/Blog\/2012\/03\/21\/the-key-economic-assumptions-osborne-is-making-are-wrong-which-means-he-cant-balance-his-books\/","title":{"rendered":"The key economic assumptions Osborne is making are wrong – which means he can’t balance his books"},"content":{"rendered":"

The budget Osborne has offered today includes some massive tax giveaways. There's almost a billion a year to big business on top of the controlled foreign company \u00a3800 million they were already getting. And although he says otherwise, the 45p tax rate is a massive tax giveaway<\/a> to 300,000 in the UK.<\/p>\n

He's doing this\u00a0because\u00a0he's still assuming there will be growth. Not as much as he did - the OBR have upgraded this year by 0.1% but downgraded the next two. But what's really worrying is how they think that growth will happen. This is indicated in the following graph, taken straight from the Budget statement:<\/a><\/p>\n

\"\"<\/p>\n

So we, as consumers, are going to be worse off. That's good news!<\/p>\n

And the government is massively contracting.<\/p>\n

And although the OBR say worldwide there could be recession, and certainly no growth, they are nonetheless saying exports will grow - which is utterly\u00a0implausible and is an assumption that comes from cloud cuckoo land!<\/p>\n

But the weirdest assumption of all is that business will invest massively more? Why will they do that? Their customers - whether here, or the\u00a0government, or abroad - are all going to be consuming less but it's assumed business will invest substantially more. That is utterly implausible. They just aren't that irrational. They want a return before they invest - and since this forecast clearly says none will be forthcoming then that isn't going to happen.<\/p>\n

In that case, as ever, this is a budget for balancing the\u00a0government's\u00a0books that simply will not deliver. And it can't - because the above four variables are the only ones that will drive growth and if business investment does not - as I am sure will be the case - then all his underlying economic assumptions are wrong. And that's\u00a0particularly\u00a0worrying. Especially for his\u00a0credibility\u00a0when it comes to the next election.<\/p>\n","protected":false},"excerpt":{"rendered":"

The budget Osborne has offered today includes some massive tax giveaways. There’s almost a billion a year to big business on top of the controlled
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