0:00
cutting the international Aid budget to
0:01
boost defense spending sounds like a
0:03
fair Exchange in a time of war and
0:06
Hazard but there's more to this
0:07
announcement than meets the eye welcome
0:09
to the week in business with me
0:15
May the Prime Minister was deadly
0:17
serious when he stood up in the Commons
0:18
this week to declare that the country
0:20
faces a generational challenge that
0:22
requires a generational response he went
0:24
on to call for a whole society effort
0:27
that will reach into the lives the
0:29
industries and the homes of the British
0:30
people he wasn't quite up there with we
0:33
will fight them on the beaches but he
0:34
was certainly reaching for some
0:36
churchillian rhetoric unfortunately
0:38
behind the stirring sound bites lies a
0:40
fairly basic piece of Westminster spin
0:43
the PM would have us believe that he's
0:45
going to spend an extra 13 billion
0:47
pounds on defense that's his number and
0:49
he's sticking to it but in fact when you
0:51
strip away the extra spending that was
0:52
already on the cards the new money
0:54
amounts to 6 billion which for context
0:56
is about2 billion less than Ed millan's
0:59
been given to spend on his pretend
1:01
Energy company the6 billion pounds in
1:03
question will come from the foreign aid
1:05
budget something that has triggered hows
1:06
of outrage from what we call the
1:08
International Development Community but
1:10
the PM is absolutely right that these
1:12
are serious times and priorities change
1:15
so he's moving defense spending to 2.5%
1:18
of GDP but he wants it to hit 3% within
1:21
a decade something that nobody deems
1:23
possible without either drastic spending
1:25
cuts elsewhere or fresh tax Rises
1:28
governments tend to look at borrowing
1:30
for this kind of thing but economists
1:31
have warned that any bid to borrow for
1:33
increased defense spending would add to
1:35
concerns about debt and lead to another
1:37
Spike and guilt yields something the
1:39
country and the government can ill
1:40
afford of course we wouldn't be in this
1:42
straight jacketed debate about spending
1:45
cuts versus tax Rises if the economy was
1:47
firing on all cylinders I've said before
1:50
that the government's progrowth ideas
1:52
are all long-term bets very welcome ones
1:55
infrastructure nuclear power New Towns
1:57
and who knows it's possible that by the
1:59
end of the de deade when the UK aims to
2:01
hit 3% of GDP on defense spending will
2:04
have rediscovered the joys of two or 2.5
2:06
or even 3% growth in our economy other
2:09
countries are managing it but until then
2:11
we're stuck with what we've got a low
2:13
growth economy committed to high public
2:15
expenditure and for reasons I've
2:17
explored here every week the government
2:19
is squarely responsible for the current
2:21
state of affairs this week the British
2:23
Chambers of Commerce warned that
2:24
employers are sitting on a powder keg of
2:27
costs ahead of April's rise in
2:28
employment taxes and minimum wage
2:30
increases to say nothing of the burden
2:32
of new employment legislation set to add
2:35
insult to injury more than 80% of the
2:38
businesses from across the country
2:39
surveyed by the business group said that
2:41
the budget's tax raid will have an
2:43
impact on their firm and not in a good
2:45
way nearly 60% said it would impact
2:48
recruitment plans while more than half
2:50
said it will prompt price Rises more
2:52
than a third said they will cut back
2:54
investment as a result of the new
2:57
burdens and if we zoom in on a
2:59
particular SE sector retail in this case
3:01
we can see what this means in reality
3:03
with the British retail Consortium
3:04
warning this week that 160,000 jobs in
3:07
the sector are now at risk not least the
3:10
part-time jobs which so many people rely
3:12
on so an economy at risk of stagnation
3:16
inflation lingering confidence shot and
3:18
a major new Demand on public expenditure
3:21
that's the context in which the
3:22
chancellor will now deliver her spring
3:24
statement in a few weeks Little Wonder
3:26
we're hearing more and more therefore
3:27
about the likelihood of further tax
3:29
Rises with former bank of England
3:30
Governor mvin King becoming the latest
3:33
big beast to raise this Prospect he told
3:35
stopie Ridge on Sky News last night that
3:37
the Outlook obviously necessitates
3:39
further tax Rises and that income tax is
3:42
where the chancellor should look I'm
3:44
afraid the truth is that it's hard to
3:46
imagine any Chancellor or any government
3:48
actually cutting taxes in the years
3:49
ahead the Tories supposedly the party of
3:51
low taxes if they're anything presided
3:54
over an ever increasing tax burden and
3:56
an expansion of the state and the only
3:57
difference with the labor government is
3:59
that don't pretend to be uncomfortable
4:01
with that the tragedy is that this
4:03
country is bursting with Talent ideas
4:05
ambitious entrepreneurs dedicated early
4:08
stage investors I meet them all the time
4:10
I met loads of them this morning before
4:11
I came in here to film this video but
4:13
there's a disconnect between their
4:14
energy and that potential and the kind
4:17
of economy that we've grown used to one
4:19
that's highly taxed overburdened with
4:21
regulation and constantly squeezed to
4:23
fund the expectations we have of the
4:25
state this is the debate that matters in
4:28
the years ahead every bit as much as the
4:30
debate we're now having on defense and
4:33
security well that's it for me this week
4:35
keep your eyes on the cityam app and
4:37
website over the weekend to stay up
4:39
toate and in the know and I'll see you
