Budget Reaction: Economics or politics?

It has to be good that 600,000 people will be lifted out of tax, following the chancellor’s decision to raise the income tax threshold to £9,205.

Raising the personal allowance will, of course, put more cash in many millions of workers’ take-home wage packet. In theory.

It is only theoretical because, as with most Budgets, this one will be broadly neutral for many people, as any give-away will be clawed back through additional revenue-raising measures elsewhere.

It’s the same for the so-called rich. While the top rate of income tax will be reduced from 50% to 45% from April next year - and that is the most controversial measure in this Budget – cash to pay for this measure will be farmed in other ways, and the better off in our society will probably end up not being, well, any better off….

Which makes you wonder how much of the theatrics on March 21 is economics and how much is politics.

We do support the corporation tax cut to 24% from next month. Having too high a corporation tax rate is a disincentive to businesses to expand; indeed, a disincentive to companies to make any kind of decent profit. Let’s hope it reduces to 20% soon.

We like the idea of enterprise loans to help young people start their own business; although experience of such loans in the past is that they are easy for governments to announce, far harder for entrepreneurs to find.

All in all, this Budget will not be a major turbo boost to the economy, more a small aerodynamic aid to help us on our way.

David Murray

Publisher