Posted by Sue Waller on Wednesday 23 June 2010
George Osbourne’s first Budget could be a defining moment in Britain's economic history. If successful, the Chancellor’s plan could put the UK on the path toward a sustainable recovery. However, the huge scale of the spending cuts and the pace in which they will be implemented could increase the risk of a double-dip recession. But, given the threats to our credit rating, is the Government right to proceed with this bold deficit-cutting programme at this time?
Well a fair proportion of our members in St Helens think so – in a recent survey, 41% stated cutting the deficit should be the new Government’s number one priority. Interestingly, 40% were also clear that a VAT rise would have less impact on their business than other tax rises. While this rise will inevitably affect businesses and consumption, the delay in the implementation date to the 4th January 2011 may provide some breathing space.
We have been lobbying hard to roll back the rise in employers’ National Insurance planned for 2011, but while the Government has taken the sting out of the rise by raising payment thresholds, some business will still be worse off from April 2011.
There were some major wins as a result of our national campaigning: reduction in corporation tax; no further reductions in capital spending above the previous Government’s plans; major review of employment regulation and an extension of the enterprise finance guarantee scheme with an additional £200m.
So, does the Budget present a courageous and forceful plan to re-balance the UK economy or is it too much too soon? Businesses and policy-makers will all hope that it will help to secure sustainable medium-term growth but time will only tell.