BUT savers and pensioners come out on top, writes Business Editor Terry Murden
Savers and pensioners were the big winners from George Osborne’s fifth Budget, but business didn’t do too badly from a Chancellor who must be pinching himself at the pace of the recovery.
How often we have heard chancellors declare they are delivering a “Budget for business” only to provide a mixed bag of halfway-house measures that leave few entirely satisfied.
This year’s chosen soundbite was a Budget for “the maker, the doer or the saver”, cleverly building his statement around those who may have seen themselves as a victim of economic downturn and the squeeze on public finance and could now benefit from Osborne’s vision of a brighter future.
Growth accelerating, government borrowing on track to be eliminated, a duty freeze on spirits, a penny off a pint of beer – the good news kept on coming and even those perennial Cinderellas in the savings industry got their invitation to the ball.
He was wise enough to check his overall bullish address by reminding us that the turnaround remains a work in progress and that the cutbacks will continue. The carrot may be bigger but the stick has not been taken away.
However, he was sufficiently encouraged by the rate of economic pick-up that he could roll out reforms and incentives to give business and industry another big push up the hill of recovery. These are designed to help turn a nation of borrowers into savers, and importers into exporters. If he can pull off that trick, then this Budget will looked upon as a milestone, not only in progress towards normalising the economy but in changing key dynamics that have plagued Britain for a generation or more.
His assistance for manufacturers to cut their energy bills and increase overseas sales will help create jobs and rebalance the economy, a key target when the coalition came to power in 2010.
By providing such targeted help for industry he is responding to the concerns expressed by Mark Carney, governor of the Bank of England, who has identified Britain’s weak export and productivity record as key drags on the recovery and a reason for holding back on raising interest rates.
The CBI described it as a “make or break” Budget, coming at a critical time in the upturn and, of course, in the political cycle. Osborne knows he may have only one more Budget to deliver if the voters decide they do not believe him and the recovery fails to take hold.
However, by ensuring there were few losers in his red box he has pleased a number of organisations and individuals from the personal finance sector and airlines, to the beer and whisky industries. The oil and gas industry will see its costs rise as a result of new tax rules and providers of annuities saw their shares tumble after he removed the compulsion for pensioners to buy one.
One big surprise was a lack of specific targeting of the Scottish independence issue. There was a freeze on Scotch whisky duty and a reminder to the Yes campaign that a fall in revenue receipts from the North Sea exposes its argument for relying on oil and gas to support an independent state. Aside from these points, an opportunity to announce measures that may have helped the No campaign went begging.
He may, however, regard the entirety of the Budget statement as an affirmation of the UK’s credentials. The growth figures have been revised upwards for a second time since his last Budget and he was able to promote Britain’s position in the league table of growing nations as above Germany, Japan and the US.