Wednesday 22 April 2009

April 2009 Budget

Its a real struggle to think of something to say. I listened to the budget driving along the M1 (if I were witty and concise I would make a pun along the lines of it doesn't matter what measure you use, M0, M1,M3 or M4, the Government has lost control, but as I'm not I won't) and struggled to keep awake. The other options were a Flying Pickets CD or Jeremy Vine: the latter would have been even worse and I saved the former for driving through London.

Taking the main things in turn:
It's not Darling's fault. I suspect history will show he was a decent person doing his best to cope with what was left behind (think of the analogy of the person with the shovel following the elephant).
The debt position is truly scary. Not just the scale of what was announced yesterday, but the fact the amounts assume a major pick up in the economy quite quickly. There will have to be savage cuts in Government spending in due course (fortunately there's so much stupid spending that will be easier done than said, although cutting public sector pensions will probably cause tension and strikes).
There were lots of superficial schemes to provide help for specific groups or sectors - but as is typical there were very few details which probably means they won't actually happen. As Cameron noted in his reply, the schemes announced in the last budget mostly haven't been taken up.
The tax increase for higher paid people is silly: it will raise no extra money, in fact it may lead to lower revenues as people adjust their behaviour. It will serve one purpose: it is highly political. Coupled with the rushed attempt to change MP's allowances announced by Brown on Monday, it is an attempt to widen the gap between Labour and the Conservatives and to show the Conservatives as only caring for the wealthy. I suspect that won't work: it's too easy to point out that every Labour Government has left office with unemployment higher than when it came in, and with Government finances in a worse state.

So, I think it was another irrelevant budget. Actually, the strategy of making a lot of noise and doing too little too late may not be such a bad one. Government actions often have unintended consequences, and letting the economy sort itself out with little interference will probably work, although more slowly and with more pain than might have been the case.

I bumped into a London estate agent today as I headed home: his comment (and he wasn't trying to buy or sell anything for me, so I believe him) was that there were signs of activity and London prices below £1m seemed to have reached a floor. Activity above that was still very slow. He was also pleased that bankers had become even more reviled than him.

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Minnie said...
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