I know many bloggers have been giving their views on the budget and I didn’t get round to saying anything.
Apart from the different aspects of who will benefit or not etc etc that seems to be the run of things in the media I just like to comment on the comments and positions taken largely by the media.
A common theme seems to be, both in the media and the attack lines from both the Tories and the LibDems that Gordon Brown has tried to pull a fast one and has given with one hand by taking with the other.
Now for the economic illiterate here’s the four possible budgets that any Chancellor can announce.
1. Give lots away, tax cuts, tax cuts, tax cuts. Works well just before an election, a particular favourite of the Tories in days gone by, leads to a massive public sector borrowing requirement, economic instability and is a pretty crap way to run an economy.
2. Take a lot more out of the economy by raising taxes and don’t spend it. Not a very common type of budget and almost unheard of in the UK but occasionally needed in times where paying off national debt to reduce the cost of servicing that debt is beneficial in the long term, however tends to completely kill off economic growth so the returns are diminished in the longer term.
3. A neutral budget. Maybe bugger about a bit with where you get the money from to encourage certain economic activity and deter/penalise others but fundamentally you’re balancing the books, it’s called good house keeping and promotes economic stability. A very sensible way to run the economic affairs of the country.
4. The neutral budget but a bit more complex. Here you can justify borrowing and or modestly cutting some taxation on the basis that the additional money put into the system or allowed to circulate there will promote efficiency and productivity gains that will in a few years time offset the initial loss of revenue or loan. This maintains economic stability but can have the added benefit of boosting economic growth at the same time which is better in the long run because it increases future revenue.
Yes, pretty much since Gordon Brown has been Chancellor he has done a 3 or 4 type budget. So for all those journalists desperate to fill column inches with crap about the budget, whatever happens you have a choice of 1 to 4. 1 may bring short term booms which will turn to busts, 2 will propagate permanent economic stagnation, 3 keeps things going nicely but doesn’t boost growth as much as 4. So please tell me what exactly all these dipsticks expected Gordon to say?
Oh, and here’s what they would have said: Option 1, Gordon isn’t Mr Prudence any more, he playing fast and loose with the economy. 2, Gordon’s a money grabbing git, 3 or 4, he’s giving with one hand and taking away with the other. So on that basis I’m not listening to anything any economic commentator wishes to say.
On a personal note, my highlight of the budget was that my son took his first few proper steps half way through Gordon’s speech and much as a love economics and respect Gordon Brown, my son took most of my attention away from the event.