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Author Archives: Graeme Leach
You may have noticed that there are very few optimists about at the moment. Vince Cable, in his recent speech to the Lib Dem conference, said that he could see no sunny uplands in the economic distance, only threatening clouds – hardly inspiring words from the minister responsible for business confidence. But you can understand why he’s looking so unhappy; with businesses postponing investment and consumers holding onto their cash, the risk of a double-dip is increasing every day.
When an eminent economist suggested in 2007 that there was a ‘vanishingly small probability’ of any countries leaving the Euro in the next ten years, he obviously wasn’t expecting first Greece, then Ireland, and this morning Portugal, to request multi-billion pound bail-outs to prop-up their ailing economies. With the foundations of the single currency looking increasingly shaky, it seems unlikely the Euro will survive long in its current form.
From our perspective this was a decent Budget for business. We’d set out our ‘wish list’ – see the blog post I wrote yesterday called ‘What budget should Osborne deliver on Wednesday’ – and George Osborne did a lot to meet our expectations on Corporation Tax. We very much welcome his proposal to accelerate the reduction in Corporation Tax to 26 per cent. There is more work to be done on, but this measure begins to kill the growing perception that the UK is a high tax country.
The Government’s coffers are pretty bare certainly, and this seems to be encouraging many people to assume there’s not much he can do in the Budget to kick-start economic activity and strengthen the recovery. With little money he can’t spend much. With little money, his scope for immediate tax cuts is limited. However, the Chancellor still has some good options.
IoD Chief Economist, Graeme Leach, reacts to today’s Budget and makes the case for early public spending cuts to tackle the UK’s huge fiscal deficit and drive economic recovery.
Everyone seems to have a view as to how to tackle regulatory reform in the wake of the financial crisis and most of the suggestions involve cutting pay and bonuses in one form or another. Rampant capitalism is blamed for an age of excess, with bankers reaping their exorbitant rewards. But while this provides a great media story with talk of investment banker bonuses well into seven or eight figures, it does not provide a sensible guide as to what we should do in response to the financial situation. Pay and bonuses are a side issue in the economic debate. … Read More »