Osborne the Magician

On Wednesday, George Osborne revealed his budget for the year.
This was the first political press conference I've taken the time to
watch in its entirety. The whole affair was pretty amusing, as with
every statement the crowd of MPs reacted very audibly: cheering
or booing, and regularly requiring Osborne to quiet them down.
... I suppose at least they were listening and not falling asleep.

The following day the TaxPayers' Alliance and Institute of
Economic Affairs
hosted a budget briefing event to discuss
what it really means for people.

Some of the most notable points to me were:

- Many of the announced changes were in fact just reversing
previous budget decisions made in the past couple of years.
So even though these measures are being taken to promote
investment and business, it doesn't, as uncertainty is one of
the greatest discouragements to investment. Companies will
not leap to investing in the UK because of the reduced tax
levels and other incentives, for they cannot be sure that things
won't just change back when the next budget comes around.

- Enterprise zones, though seemingly good for businesses, are
likely to not be beneficial. If they are effective, with great enough
incentives to influence firms, it will cause distortions in the
market and regions. If the incentives are not sufficiently large,
then they will not be effective, and there is thus no point to have
them. As Philip Booth wittily concluded,
there should just be one enterprise zone: the UK.

- Booth also asserted that regulations imposed since 1998
alone have cost business £90 billion; thus at just 0.4% of this
amount, the £350 million that businesses stand to gain after the
budget is really nothing compared to the total cost of regulation.

There were many tricks up the government's sleeves that were
exposed at the talk. It's amazing how without knowing the whole
picture, one can be taken by the declarations of support for
business and growth.

1 comment:

L said...

I agree with all the above.