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Daily View: Reactions to the Budget

Clare Spencer | 08:59 UK time, Wednesday, 23 June 2010

Commentators dissect the Budget and predict how it will affect the next four years.

Iain Martin says in the Wall Street Journal that Osborne's Budget marks the start of a dismantling of the Brown Legacy:

George Osborne

"Mr. Osborne does not have a radical reputation--his record suggests that he is overly focused on short-term tactics at the expense of a longer term strategy. But in a well-received and cleverly presented budget he chose to be rather bold. At the centre of it was the argument that private sector activity will drive recovery and that an over large state will crowd it out.
"This might sound uncontroversial, but not in contemporary Britain, where the state is almost 50% of the economy. Throughout the Brown years, ever higher public spending was fetishized as being an undeniable good. To question such assumptions was heretical."

Polly Toynbee says in the Guardian that the Budget is one of ideological choice and not of necessity:

"There was nothing "unavoidable" about adding £40bn to Labour's already eye-watering pledge to halve the deficit in four years. There was no necessity to create a surplus in six years, returning to depression economics with mortal risk of sinking the country into second recession or slump. This was the budget to fulfil old Tory yearnings: it promises to shrink the state below 40%, which Mrs Thatcher never achieved."

Peter Oborne predicts in the Daily Mail that hacking back the defence budget and the civil service is going to change Britain's position on the world stage:

"This Budget marks a break point in British history. Since World War II, Britain has always arrogantly believed that we are automatically entitled to a place at the top table in global politics, while the nation has taken for granted an extravagant lifestyle which has long ceased to reflect the reality of our economic place in the world.
"In effect, Britain over the past ten years has resembled an old but moribund aristocratic family, whose wealth has been dissipated but which still has exalted ideas above its station and is determined to live way beyond its means."

Steve Richards warns in the Independent that George Osborne may be acting too hastily:

"Osborne's basic premise sets him on a dangerous path, an assumption that balancing the books is necessary by the time of the next election. As far as the coalition is concerned, any debt is bad even if interest repayments are generously low and the consequent spending keeps the economy alive.
"Although debt is falling faster than predicted, Osborne is restlessly impatient to wipe it out altogether and take a bow as a grateful electorate pay homage to his revolution in a few years' time. It is no exaggeration to talk in terms of a revolution. Osborne hopes to re-cast the state and to do so in ways that make it politically impossible for future governments to reverse."

A cabinet minister in the Thatcher government and former vice-president of the European Commission Lord Brittan says in the Financial Times [subscription required] how the Thatcher government responded to criticism from economists about their cuts:

"In the first place it was essential to distinguish clearly between our genuine long-term aspirations and the overwhelming need to take action to restore public finances. Putting our house in order was a necessary precondition to meeting those long-term aspirations in a way that would be sustainable.
"We had to reiterate these points again and again with clarity and forcefulness, and not assume that our message had got through just because we were getting bored with repeating it so often. We had to persuade our own supporters that our aspirations were genuine and would be met as soon as the crisis was over. We succeeded in doing so."

Phil Hendren says in his politics blog Dizzy Thinks that the VAT increase marks a Class War:

"[M]aking the "one in every 25 pounds spent on VAT vs one in every seven pounds spent on VAT" argument fails to realise that on the one hand you have someone spending their money, and on the other you have someone spending money that that's been taxed once already and given to them for free.
"I'm not arguing that they shouldn't be given the money, rather that trying to make out VAT unfairly hits those on the lowest income ignores the reality that the money spent on many of the services that are subject to VAT isn't really "income" in the traditionally earned sense."

Links in full

Iain Martin | Wall Street Journal | Osborne's Program to Dismantle Brown Legacy
Polly Toynbee | Guardian | A Tory budget with only a little Lib-Dem icing
Peter Oborne | Daily Mail | A masterful Budget which will tear the coalition apart
Steve Richards | Independent | The beginning of the end of the state
Leon Brittan | Financial Times | A good start in the battle for public trust
Phil Hendren | Dizzy Thinks | Class War and VAT

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