0:00
if I had to describe the budget in one
0:02
sentence it would probably be to point
0:05
out that it failed and it failed on the
0:08
tests that the government set itself it
0:11
will not achieve what the chancellor
0:13
said it was designed to achieve which is
0:15
Grace the labor party spent the entire
0:18
election campaign talking about their
0:20
pursuit of economic growth and the
0:22
chancellor spent the first 15 minutes of
0:25
her budget statement talking about the
0:26
importance of economic Grace and many of
0:29
us watching it would have felt as we
0:30
heard more and more about the business
0:32
tax Rises the borrowing figures um that
0:35
it is going to be unlikely to achieve
0:38
economic growth and lo and behold uh the
0:40
analysis from the office for Budget
0:42
responsibility and from uh other August
0:45
institutions in the wake of the budget
0:47
uh have said that that simply uh is not
0:49
going to lead to economic growth there
0:51
will be a quick hit a sugar rush high
0:54
from all the public spending and then
0:55
growth will taper back down to the
0:58
anemic levels that this country has got
1:00
used to on the whole this cannot be
1:02
described as a pro business budget I
1:05
don't think this can be described as a
1:06
pro bus government but welcome to life
1:09
under labor nobody should be terribly
1:10
surprised that on the whole the state
1:12
gets bigger businesses are called on to
1:14
fund uh that endeavor the big winner
1:18
from yesterday's budget was of course
1:19
the public sector and and not least the
1:21
National Health Service which is going
1:22
to swallow up almost all of the 25
1:25
billion pounds in new taxes which are
1:27
going to be levied on businesses and of
1:30
course taxes levied on businesses are
1:32
effectively taxes levied on people uh
1:35
and even the chancellor has had to
1:37
acknowledge painfully acknowledge that
1:39
the National Insurance hikes uh that
1:41
employers pay will be felt by employees
1:45
so for business on the whole the budget
1:47
was not terribly encouraging um it must
1:50
be said that there will be some winners
1:51
there's some encouraging noise around
1:53
planning around big infrastructure
1:55
projects Etc that's the St that's the
1:57
kind of stuff that is going to account
1:59
for some form of economic growth over
2:01
the short term before it Fizzles out and
2:05
the Country Returns to pretty
2:06
disappointing growth levels um it's not
2:09
just the budget of course take it
2:11
alongside the minimum wage increases
2:13
which is good news for some low pay
2:15
people who will see their pay increase
2:17
it is going to be bad news for some
2:18
businesses who are going to have to find
2:20
those costs elsewhere alongside the
2:22
National Insurance contributions and
2:24
indeed alongside the burden of Labor's
2:26
uh employment rights reform agenda so
2:28
taken together I don't think there's a a
2:31
huge amount for business to celebrate
2:33
they may feel like they dodged a couple
2:34
of bullets but on the whole I don't
2:37
think it's very good news the thing that
2:38
did surprise me about this budget was
2:41
the decision by the chancellor to
2:43
finally end the Injustice if you like of
2:46
fiscal drag uh which basically is the
2:49
State of Affairs whereby millions of of
2:51
people get pulled into higher rates of
2:54
income tax that were never designed to
2:56
catch them uh simply because those rates
2:58
those thresholds are not adjusted for
3:00
inflation and the Tory government was
3:02
pretty Shameless on this and allowed
3:04
more and more people to be dragged into
3:05
paying more and more tax this labor
3:07
government has said that by just before
3:09
the next election they will end that
3:11
will good on them and uh put a note in
3:12
the diary and try and hold their feet to
3:14
the fire on that claim the other thing
3:16
that surprised me is um perhaps I was
3:19
being too generous in my expectations of
3:20
what the budget might contain but it did
3:22
surprise me the extent to which growth
3:24
has effectively been written off in the
3:26
words of the institute for fiscal
3:27
studies after the Sugar Rush of a couple
3:29
of years of growth driven by spending
3:32
based on borrowing the government is
3:33
going to have to get lucky on growth and
3:36
that is quite extraordinary for a
3:38
government who have used the word growth
3:40
at every opportunity who have won an
3:41
election on the basis that they were
3:43
going to deliver economic growth and who
3:45
presented a budget that they claimed
3:47
would generate economic growth the
3:49
formal analysis seems to be that it
3:50
isn't going to happen and they're going
3:51
to have to rely on good luck and by the
3:53
way it's businesses who are going to
3:55
have to fund that experiment businesses
3:58
pretty much of all sizes are by their
4:02
resilient uh the main implications of
4:05
most of the tax changes that we saw in
4:06
the budget are that businesses perhaps
4:09
won't now do things that they otherwise
4:10
would have done so if your costs of
4:13
employment are increasing quite
4:14
dramatically in many cases hundreds and
4:16
hundreds of pounds per employee you are
4:19
of course going to consider what you can
4:22
do in terms of pay Rises for your
4:23
existing employees you're going to
4:25
consider um whether you can reach with
4:27
that expansion whether you can grow your
4:29
head account and I'm talking in
4:31
particular about the vast majority of
4:33
midsize businesses around this country
4:35
the businesses that actually power this
4:37
country you know large businesses quite
4:40
often they can absorb this they have the
4:41
HR functions they have you know perhaps
4:44
the the infrastructure internally it
4:46
might create a headache but it's not
4:47
going to be make or break there will be
4:49
businesses in this country for whom some
4:50
of the decisions announced in the budget
4:52
do constitute make or break um changes
4:55
to their operating environment I would
4:57
say that some of the worst fears that
4:59
were expecting around the tax treatment
5:02
of entrepreneurs have not materialized
5:04
so I would hope that we're not going to
5:05
see the sort of Exodus of startup
5:08
Founders from this country nevertheless
5:10
might put off people from starting a
5:12
business here uh in a way that they
5:14
might have done had those changes not
5:16
come into effect on the whole I don't
5:18
think this can be seen as a very
5:19
encouraging budget for business I don't
5:21
think it's a very good budget for the
5:23
country I think they've got their
5:24
priorities wrong I think they are
5:26
relying too much on borrowing and on
5:28
taxing the productive part of the
5:29
economy to go on funding the
5:32
unproductive parts of the economy not
5:34
least the National Health Service this
5:36
is a muddling through budget presented
5:39
as dramatic reform when it's nothing of
5:42
the sort the budget has now happened
5:44
some of the changes are pretty immediate
5:46
some of them are coming in next year but
5:48
now you feel like perhaps labor can
5:50
begin to govern they have a country to
5:52
run they have a place in the world to
5:54
consider they have huge projects and
5:57
ideas that they say they want to tackle
5:59
on transition and on economic growth
6:02
though as I've suggested I don't think
6:03
their budget is going to help them in
6:04
that Pursuit uh it does feel now like
6:07
labor can start to govern they've told
6:09
us what kind of environment they're
6:11
going to be governing in they've told us
6:13
the kind of economy they're going to try
6:14
and create and they're going to have to
6:15
try and make a go of it as is British
6:18
business well for more of not just my
6:20
thoughts but the thoughts and the expert
6:22
analysis of City's excellent team of
6:25
business and financial journalists for
6:27
thoughts on the budget and indeed every
6:29
other day of the week you should go to
6:30
city.com you should look for our app and
6:33
you should sign up for our emails and of
6:34
course keep your eyes peeled for our
6:36
newspaper on the streets as well
