Economy

Thursday

James Forsyth

Osborne hopes business will see past the bad headlines

Today’s front pages concentrate on the so-called ‘granny tax’, the surprise of the Budget. But the real test of this Budget is going to be whether it delivers growth. If it does, then it will make a Tory majority in 2015 more likely. If it doesn’t, then the decision to cut the 50p rate will become even more politically problematic.   Given that the Budget is fiscally neutral, this growth is going to have come from either the couple of supply side measures in the Budget or by finding a way to unleash those elusive animal spirits. Indeed, I think this desire to boost confidence is one of the main

The Spectator

The Spectator’s Budget briefing

What was really in George Osborne’s Budget? Last night we held an event, in association with Aberdeen Asset Management, to discuss just that. Click here for a free pdf copy of the briefing paper produced for the event.

Wednesday

James Forsyth

Tory MPs welcome the Budget

George Osborne and David Cameron have just addressed the 1922 Committee of Tory backbenchers. They received the traditional desk banging reception and Tory MPs seemed in good spirits as they left the meeting. Interestingly, they were nearly all relaxed about the increase in the personal allowance, believing that they would get the credit just as much — if not more than — the Liberal Democrats. One told me that ‘the public view this as a Conservative government when things are going well and a coalition one when things are going badly’. Perhaps the biggest piece of news out of the meeting is that Osborne offered Tory MPs considerable encouragement that

James Forsyth James Forsyth

All that matters now is growth

With every Budget, the early Cameron emphasis on greenery and General Well Being not Gross Domestic Product seems a more distant memory. Today’s Budget showed that, to Osborne at least, growth now trumps these more abstract concerns.   So, we saw an announcement that the planning rules would come into force pretty much as planned from next Tuesday. This means that Osborne has simply overridden all the bureaucratic and legal objections from DCLG. Although, I understand that councils who already have a sufficiently pro-development local plan will have a year to adjust to the new rules.   Sunday trading rules, a classic bit of General Well Being paternalism, are also

Peter Hoskin

Behind Osborne’s 50p tax change

How significant was this Budget? On an economic level, not very. There’s no discernible impact on growth: all of the main forecasts have more or less stayed the same since the Autumn Statement. Borrowing is the tiniest bit lower, mainly thanks to a £23 billion accountancy trick with Royal Mail pensions. And even many of the policies announced today will barely rouse the Exchequer’s attention. That cut in the top rate of income tax to 45p? It will mean only £100 million a year less in direct revenues. That stamp duty increase for properties worth over £2 million? It will net only £300 million a year. The overall effect is

Fraser Nelson Fraser Nelson

Twelve points about the Budget

There’s much to applaud in this budget, but as ever we in Coffee House are focusing on things jumping out from the small print. Here are a few things I’ve noticed so far. 1. Don’t mention QE. In his Pre-Budget Report, Osborne was candid about his economic policy: ‘fiscal conservatism, but monetary activism’. That is to say, fiddling about on the margins with taxes, while the Bank of England — 100 per cent owned by the Treasury — is midway through the largest QE experiment ever attempted in the developed world. It is impossible to understand Osborne’s economic policy, his Budget and those it affects without also considering the effects

Jonathan Jones

The Budget: What you need to know

1. Growth. The OBR’s forecasts are essentially unchanged from the Autumn Statement, but nevertheless represent a much bleaker outlook than we were given a year ago:  2. Debt. Despite Osborne’s talk of ‘paying down the debt’, he’s actually adding to it — by 59 per cent over this parliament. He is, though, on course to meet his second fiscal rule to see the debt to GDP ratio falling by 2015-16: 3. Deficit. Ignoring the effects of transfering the Royal Mail pension deficit, there’s hardly any change to the borrowing forecasts since November. Progress on deficit reduction will be much slower than announced in Osborne’s first two Budgets: 4. Unemployment. The

Clarissa Tan

Chinese whispers | 21 March 2012

China’s rumour mill, hyperactive even in the calmest of times, has been in overdrive in the past two days. Monday evening and early Tuesday in Beijing, the country’s Twitter-like microblogs were abuzz with speculation there could have been a military coup, possibly linked with the recent demotion of Communist official Bo Xilai. There hasn’t been a coup, nor is there likely to be. Crazy rumours swirl in China every day (though not always of this level of seriousness). It’s said that authorities are now banning the word ‘coup’ on microblogs.   The bigger issue for China is that its policy of controlling information, while trying to catapult itself into the

Peter Hoskin

A fistful of questions on Budget morning

Thanks to Budget purdah, we’re all in the dark about what will be in George Osborne’s Red Book today. Oh, sorry, that’s wrong, don’t know what I was thinking. Truth is that, unless the Chancellor has some monumental surprises lined up, we’ve actually heard about much of the Budget in advance. We know, for instance, not just that he’ll cut the top rate of tax from 50p to 45p, but also — courtesy of Andrew Grice in the Independent today — the internal political slog by which he reached that decision. Thanks to the proclivities of coalition government, this has to be one of the most pre-briefed Budgets ever. There

Tuesday

James Plunkett

Four tests for Osborne’s Budget


With the Coalition taking pre-Budget briefing to new levels you’d be excused for thinking there’s little we don’t know about tomorrow’s statement. But here are four questions we can’t yet answer, and that will be crucial to assessing whether this is a Budget for low-to-middle earners as the Chancellor claims:
 1) Will the new increase in the personal allowance be restricted to basic rate taxpayers? When the Coalition raised the allowance by £1,000 back in April 2011 they cancelled out the benefits to those at the top by lowering the 40p tax threshold. The second time around — the £630 increase that kicks in this April — they didn’t. From

Alex Massie Alex Massie

The Limits of Political Speech: Talking About Everything Just Makes It Worse

The Sunday Telegraph was sensible enough to publish a pleasing article by Brother Hoskin last weekend in which our man took the temperature of political speech-making in Britain today and, concluded, that it is, well, tepid. The speechwriters Pete talked to seem to agree. The decline of the political speech is, for sure, a minority concern. The people are not troubled by it. In any case, journalists, being in the word business themselves, are prone to over-estimating the power of political speech. Except in unusual circumstances, economic fundamentals are more important than Prime Ministerial or Presidential rhetoric. Perhaps the best advice in Pete’s article is that David Cameron should make

Peter Hoskin

Why Labour’s 50p tax wobble is dangerous for Ed Miliband

Why did Gordon Brown wait until the last few weeks of Labour’s thirteen-year reign to implement a 50p tax rate? Easy. Because it wasn’t so much a fiscal policy as a fiendish trap, designed to cut into a Tory government’s flesh. But now, it seems, the trap has snared another victim: Labour itself. The Telegraph’s Daniel Knowles has already neatly summarised the politics arising from Sam Coates’ report (£) that Labour will neither back the scrapping of the 50p rate nor promise to reinstate it either. But the basic point is worth repeating: if that’s the approach that Labour chooses, then they’ll be left in a complete mess. They can

Eamonn Butler

Has Osborne learnt the right lessons from Adam Smith?

According to Rachel Sylvester in The Times (£) today, George Osborne’s love of soaking the rich — from the non-dom levy to the tycoon tax – stems from the importance he puts on the ‘empathy’ described in Adam Smith’s Theory of Moral Sentiments. If so, he’d better start re-reading his Adam Smith. Certainly, the Chancellor is familiar with Smith’s other great book, The Wealth of Nations (1776). He wrote an introduction to a recent edition of it. That book is a passionate call for free trade and for open and competitive markets, and a stinging critique of the mutual back-scratching between businesspeople and politicians — what today we would call

Monday

Melanie McDonagh

Sundays should be about more than just economics

The Chancellor didn’t even bother to hide the thick end of the wedge as he inserted the thin end into the Sunday trading laws. He declared yesterday that restrictions on Sunday trading would be lifted for the duration of the Olympics and Paralympics on the basis that ‘It would be a great shame if the country had a “closed for business” sign on it.’ And he went on to remark, ‘maybe we will learn some lessons from it’. What might those be, do you suppose? That people, left to themselves, will shop all day, every day and should therefore be able to? Certainly that was the conclusion of The Times,

Fraser Nelson Fraser Nelson

Yes to new roads, no to a pensions raid

New roads in Britain are badly-needed, but who should bear the costs? Motorists, says David Cameron — and his speech today is a move in the right direction. No tolls would be slapped on existing roads, so motorists are free to drive as freely as they do now. But if they want a shortcut, they’ll have to pay for it. What I’m uneasy about is Cameron trying to raid our pension funds to help subsidise this. There are many ways to raid pension funds — QE is one. The National Association of Pension Funds estimates that a scandalous £130 billion has been wiped from the value of our collective pensions

Jonathan Jones

Support for scrapping the 50p rate grows, but why?

Will Wednesday’s Budget herald the end of the 50p tax rate? It’s looking increasingly likely, with today’s Telegraph claiming that Osborne will replace it with a top rate of 45 per cent. Leaving the economic arguments aside, the consensus is that this will prove an unpopular move that could damage the Tories. Tim Montogmerie tweets that ‘if the post-Budget headlines are about 50p then Tories have a political problem’. The New Statesman’s George Eaton writes that it ‘would do more to retoxify the Tory brand than any other measure’. But how dangerous a move is it? Certainly, scrapping the 50p rate doesn’t poll well. Yesterday’s YouGov poll found 60 per

James Forsyth James Forsyth

The coalition needs to get a move on

David Cameron’s speech today says all the right things about infrastructure. But the test will be whether Cameron forces these changes through the system.   Already, the planning reforms have been held up by a lengthy consultation. The government will respond to this consultation this week. But that won’t be the end of the matter. For even after the government has set its plans before parliament, there’ll be a ‘transition’ period between the old rules and the new ones.   All of which is a reminder that if Britain, and especially the capital, is going to get the extra airport capacity it so desperately needs, then decisions will have to

Peter Hoskin

A significant moment for the minimum wage

Here are some numbers for you: the adult rate of the national minimum wage will be raised, this October, by 11p to £6.19 an hour, but the separate rates for 16-17 and 18-20 year-olds will be frozen, at £3.68 and £4.98 respectively. I mention this not just because these figures were announced today, but also because it’s the first cash freeze in any of the rates that we’ve seen since 2005 (and even that was when the 16-17 year-old rate was kept at the same level after its very first year of existence): The question is, what now? The government is defending the freeze by saying that, ‘Raising the youth

Peter Hoskin

Where will Cameron’s road proposal take us?

Are we facing ‘toll road UK’, as the Mirror suggests this morning? That is certainly a possibility arising from David Cameron’s plan to allow private firms to bid for chunks of Britain’s motorway system — but I wouldn’t get too excited just yet. It’s a very distant possibility at the moment. After all, just note the details of the story. The routes that the coalition has in mind are very significant ones, but they still add up to only 3 per cent of the national network — ‘toll road UK’ may be pushing it. And then there’s the fact that nothing has been entirely decided yet. We’re told that, ‘The

Sunday

Fraser Nelson

Taleb in 30 minutes

Nassim Taleb, the Lebanese-American academic whom we interviewed in The Spectator last month, is the subject of a Radio Four profile by The Economist’s Janan Ganesh that was first aired last Monday but will also be on Radio 4 at 21:30 this evening. David Willetts is interviewed, saying that Taleb’s work underlines the folly of long-term forecasts because ‘the big events that shape the world today are those which no one predicted four or five years ago’. The discovery of Shale gas, for example, could utterly change Britain’s energy requirements. Taleb’s heroes are Burke and Popper: his emphasis is on the need for humility, on how hard it is for