George Osborne Delivers The Emergency Budget
As MR George Osborne stood at the front door of number 10 holding that traditional briefcase up the media we knew there would be a budget to talk about for some years to come. The conservatives made this a budget to reduce the UK’s national deficit and stated this was would be hard but fair. As the press toady write about how impressive his stance is, or how the latest cuts and VAT rise would form a second dip in the economy, you know that this is either a very clever man or a fool waiting to fall.
With President Obama suggesting to the world leaders, that cutting spending too quickly could cause a second recession (something Gordon brown was keen to promote) and other financial experts agreeing, the coalition have decided just to go for it now, not waiting for things to level out more. The biggest announcement was that VAT would rise from 17.5% to 20%, there were some rumbles in the house of commons when this was mentioned, but considering this was something Labour were going to do anyway, no one rally could complain. As this will happen in January next year, it may be a good Christmas for many retailers as people buy early to avoid the VAT rise. On saying that, the previous Vat drop to stimulate the economy by Gordon brown, didn’t seem to make any impact, so there is also an argument, that 2 1.2% added may have the same effect as being taken away.
Then we start talking about the public sector and how just about all departments will have to make 25% reductions in costs and that there will be a pay freeze on most public sector workers for the next 3 years. How will this go down? Well considering that many workers were expecting to lose their jobs or at least compete for them, this may not get as much criticism as in different times.
The Liberal Democrats are in uproar over the immediate VAT rise, claiming this is not what they voted for at the last election and that they are in bed with the Conservatives. It is true that some jobs were created to accommodate these Liberal politicians, an argument that will not go away and will probably get worse. Is this budget there will be more news and old news than normal.