The Chancellor has given himself quite a target for the budget that he revealed today, saying it is the budget of aspiration, and will help people not only get work but be able to reap the rewards of it as well. This seems a positive, traditionally conservative, idea that seems to show that we might be turning a corner. Unfortunately, things are not that easy, especially when you have a government that is completely strapped for cash.
On the one hand, we do have the rise in tax allowance, as well as the reduction in National Insurance payments. This will help both workers and businesses, and is the sort of thing that does actually help the economy. This will lift a lot of people out of having to make contributions that they really would rather not have to pay, especially when times are tight.
In addition, we are seeing a cut in corporation tax, meaning that we have the lowest tax on business of any of the major economies. Corporation tax is something that businesses would like to see as much as you or me like to see income tax cuts. It just makes it easier to survive. If we couple this with the financial help that the government will be providing to people wishing to buy a house (Interest free loans are being provided for up 20% of the worth of a house), things are really starting to look good.
The problem is, as I mentioned early, it is hard to make things all rosy and cheerful when the economy is in the way it is, and the government has long since run out of money. If you fund one thing, like tax cuts and help with buying houses, then you have to finance it with cuts to something else. This means that this budget is no big announcement of the end of austerity, nor is it necessarily the saviour of the economy, as £2.5 billion cuts were also announced.
Then we have the issue with the economic forecast. We were expecting an alright growth of 1.2%, something that we should no longer look forward too, the growth forecast has been halved, meaning that the stagnation is yet to be completely thrown off. It looks like it will be another year of teetering on the brink of recession, even though infrastructure investment will at least bring more jobs.
We must, however, view this budget as something that is at least different from the past. There is nothing for Labour to home in on for criticism, like the ill-judged pasty tax from last year, and it does seem to present a new emphasis on stimulating the economy, even if it is at the expense of other areas. In addition, schools and hospitals are both protected from the cuts. Therefore, this might be something of a return to the compassionate conservatism, where the Tories support business without abandoning the needy.
Obviously, this budget is not perfect, but it is probably one of the better that Osborne has produced. We will just have to hope that it works out in the end.