Budget ’09: Much to welcome, but not bold enough
There is much to welcome in this budget, particularly action on youth unemployment, some first steps in creating a fair tax system and better support for the unemployed. There is some help for construction, and a Strategic Investment Fund provides real resources for Monday’s welcome industrial strategy. Pensioners will welcome the increase in capital disregards. This budget clearly acknowledges that the government has a central role to play in turning the UK into a competitive low carbon economy.
But it is does not bring the same boldness and vigour to getting the real economy right as the government showed in dealing with the banking collapse. The biggest drain on the public finances will be continuing mass unemployment and we needed a bigger and better targeted stimulus to the economy today. A half per cent boost in public spending is not enough this year. Next year’s tightening is too much, too soon and is based on an optimistic assumption that the recovery will start this year.
In particular cuts in public spending – and these are cuts, not efficiency savings -are absolutely wrong at a time when there is a collapse in demand in the private sector. So while we can welcome some significant changes in direction and good individual policies, this is still some way short of what was needed to maximise the fight against unemployment and ensure that we emerge from the recession as a fairer, greener and better balanced economy.