Comment: Budget leaves Osborne no wiggle room

IT WAS, said the Chancellor, a Budget for an “aspiration nation”, designed to support those who wanted to get on and work hard.

Businesses were generally encouraged by measures that will reduce costs, but it remains questionable whether they represent a kickstart, let alone a stimulus to growth.

A cut in employers’ national insurance (NI) contributions was the main headline grabber. The so-called “tax on jobs” has been a bugbear for businesses of all sizes and was demanded only this week by Justin King, chief executive of Sainsbury’s.

But there was no mention of an existing NI holiday scheme that the government has been operating in Scotland since June 2010, allowing new companies a deduction of up to £5,000 on each of the first ten employees they hired. Take-up has been poor because recruits had to be paid £40,000 to get the maximum benefit and so the savings have been negligible.

This new scheme will extend it to 450,000 businesses across the UK and looks a better proposition. At the very least, it should give firms a little more confidence about hiring staff.

It was also one of the supply-side measures that George Osborne promised when he stood up in the Commons. The 1 per cent cut in corporation tax gives the UK a competitive edge, though how it is funded was not clear.

He is talking to the Bank of England about extending the Funding for Lending scheme and those discussions must result in this cheap money filtering down to the small-firms’ sector.

The rest of his statement consisted mainly of a stream of forecasts that will probably be revised anyway. Funnily enough, growth predictions are always upward and the gross domestic product figures for the next four years did not disappoint, showing expansion each year to 2017.

The widening of the monetary policy committee’s (MPC’s) remit, beyond the inflation target to include “unconventional instruments”, was expected and will give incoming Bank of England governor Mark Carney more of what he asked for.

But again, does it amount to a real change? Critics say it merely formalises what the MPC was already able to do.

The problem for Mr Osborne was finding himself strapped into a deficit-controlled straitjacket. While he sticks to his austerity measures and growth remains tepid, he has no room for manoeuvre and the weakness in demand will limit the effect of his supply-side moves.

No-one expected a giveaway Budget, so a fiscally neutral package that didn’t scare the horses was probably the best we could expect.

At least there was good news on fuel and a penny off a pint. Be grateful for small mercies.