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Budgets matter for two reasons. There is the stuff that gets the media attention. This category usually involves a bit of taking from rich Peter — the owner of a private jet in this case — to give to poorer Paul — the driver of a more humble, petrol-consuming car. Or from a maligned banker to a low-paid taxpayer. That is the stuff of politics — redistributing money earned by other people. It is the meat on which Labour governments fed for over a decade, and in which George Osborne indulges himself when the desire to be fair — phrased as "We are all in this together" — becomes a necessary political move to soften a change in policy that adversely affects some group accustomed to ever-rising benefits.

Bullish mood: George Osborne, Chancellor of the Exchequer, at the Bombay Stock Exchange (AP Photo) 


The second reason budgets matter is that they tell you what a government is really all about. This one is about growth. Only anti-growth environmentalists and those seeking the Holy Grail of "happiness" deny that the future wellbeing of Britain's citizens depends on the ability of the government to devise plans to stimulate or allow economic growth. But Britain cannot grow itself out of its fiscal difficulties. The deficit is too big, too deep-rooted to be overwhelmed by a growth spurt, much less the growth the Chancellor accepts is most likely to characterise Britain in  this parliament. Growth is important, but it is only one part of a programme that must also include putting the nation's fiscal house in order by instituting those now-famous "cuts", the ones the Chancellor says he has already docketed and of which he would rather speak no more. Spending reductions there must be, in part to bring the deficit under control, in greater part to reduce the relative size of the state and leave more breathing room for the private sector and individual entrepreneurship. The Chancellor knows all of this, and knows, too, that supply-side reforms involve short-run revenue losses in pursuit of longer-term gains; with the nation's ledgers in sorry shape, balancing the need for revenue now against the desire for more at a later date is no simple matter.

At first glance, economic growth should be within the government's grasp. Britain is home to the world's fifth or sixth largest economy; its professional services sector — law, finance, accountancy — has global reach; its universities attract the best and brightest students and lecturers from around the world; its rule of law protects investment and intellectual property; its democracy is vibrant, channelling demands for policy changes into the polling places rather than the streets, at least most of the time. 

But at second glance these virtues are in danger — and from the very government that is eager to accelerate economic growth. 

Its professional services sector is under siege from ministers who quite reasonably remain annoyed by its contribution to the financial crisis and its subsequent unwillingness to share the pain it created. But the sector's critics seem unaware of the consequences of their repeated expressions of that annoyance. Britain's universities are victims of an incoherent funding regime and a destructive immigration policy that is the result of a truce between the coalition parties; its rule of law is repeatedly subverted by an overweening bureaucracy (or bureaucracies, if you count Brussels) that specialises in ex post ad hockery; and its democracy is being tested to determine whether government becomes a permanent feature of political life and an ongoing excuse for abandoning campaign commitments in order to retain coalition cohesion.

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