George Osborne’s eighth budget was great for business. This bears repeating because four days after the Chancellor delivered his speech so much else that he unleashed from his little red box has blown up in his face.
The worsening economic and deficit forecasts cast a long shadow over the affair. The sugar tax has prompted outrage from the soft-drinks industry and its efficacy as an anti-obesity measure has also been questioned. The final blow came as his Cabinet colleague Iain Duncan Smith quit claiming he disapproved of the cuts to disability benefits, despite indications from the Government that the policy could be subject to a delay (read: U-turn).
Quite a mess.
Hands on: At long last George Osborne delivered dramatic changes to the business rates system
But despite all this, business should be very pleased with the majority of policies unveiled last week – particularly small companies. At long last the Chancellor delivered dramatic changes to the business rates system that will help hundreds of thousands of small companies which have been slaving under an onerous and outdated local tax system.
Along with improved tax reliefs for entrepreneurs who invest in their own business and steps to curb unfair competition from offshore companies dodging our VAT, the Budget amounted to a huge fillip for smaller companies.
Bigger business will pick up some of the bill for this largesse, but they too will benefit from planned reductions in corporation tax. So overall the business community (with the exception of fizzy drinks makers) will be cheering. The question now for Osborne is whether this will last, and so we must come back to those wider economic prospects and the Chancellor’s self-imposed austerity straitjacket.
By making the reduction of the deficit the Holy Grail of his economic policy, Osborne committed to creating a recovery with one hand tied behind his back. There is only so much that low interest rates can do and, as is now increasingly clear, the power of The Bank of England to stimulate the economy with low borrowing costs is all but spent.
So if the global economy continues to buffet the British recovery, Osborne may come to wish he could relax his deficit targets yet again and spend a bit of money to keep the show on the road.
To make such a change now would be disastrous for his reputation. But he might just be able to pull it off if he can come up with a mighty big excuse. It would need to be an event so shocking that he could argue that it would no longer be responsible to pursue austerity at all costs.
I wonder if there is anything coming up, perhaps in June, that could provide that dramatic event?