BBC BLOGS - Newsnight: Paul Mason
« Previous | Main | Next »

Osborne's Emergency Budget: Open Thread

Post categories:

Paul Mason | 12:32 UK time, Tuesday, 22 June 2010

George Osborne is delivering his first budget. Here's an open thread for Idle Scrawlers. Will blog substantively later.


  • Comment number 1.

    They bottled it on Capital Gains Tax - all that talk of 40% and it is just 28%.

    Looks like Redwood and Davis won that one - so much for Clegg and Cable being strong on a CGT raise, wanting to stop UK property bubbles and make housing prices fairer for all.

    I doubt that many second home owners and BTL empire builders will worry about this at all.

    That is a kick in the soft bits for many Liberal voters who saw a tax cap on the British obsession with house prices being perhaps their only chance to afford a home.

    Oh well, for the price of a 2 up 2 down 100 year old terrace in the Valleys you can now buy a large condo in the States.

  • Comment number 2.


    Bound to be horse trading.

  • Comment number 3.

    How much leeway do we have to give the OBR before some 'surprising and unexpected' results blow their predictions out of the water ? What happens then, is there a Plan B ? (unlikely, these are idealogues, there is no alternative)

    From what I can gather from the budget, public spending in cash terms will fall - however GDP will fall slightly faster meaning that as a percentage, public spending will actually rise.
    GO, seeing the rise will panic and introduce even sharper cuts in the spending review. Unemployment will rise lowering the tax take, increasing benefit spend and lowering consumption.
    This will lead to GDP dipping again and more cuts. We will chase our tails until we reach the bottom.

    Will I be right ? I sincerely hope not, I hope that GO has a unique vision and insight and that his innovative thinking and clear strategy will lead us all into the promised land of milk and honey.
    (rather than into the pits of despair with only thin gruel and cold water for comfort)

  • Comment number 4.

  • Comment number 5.

    I caught the last 20 minutes of GO and the first 10 mins of HH on BBC.
    Such was the open goal presented by the coalition government even HH looked convincing. The variety of measures proposed made it difficult to get an overall impression of whether this budget was "too far too fast" or the inevitable result of overshoot in the commitments made in the asset bubble. 25% real cuts over 4 years in departmental spending will certainly be a game change. However, there is still no credible plan for the UK economy 10 years out, besides the pious hope that the private sector will employ those laid off from the public sector. Why would they? The cultural divide is so great that conversion to working for profit is highly unlikely. Sotto Voce, with inflation running at 5% a 2.5% increase in the rate of VAT in the pipeline, the 2 year pay freeze for public sector workers is in reality a substantial cut. Even if inflation falls back, interest rates will start to rise again, adding to pressure on public sector wages. Expect public sector union strife for the next few years when reality sinks in. I guess "big society" means that those large families who lose housing benefit and are forced to move out, will be thrown on the mercy of Shelter, the housing charity. We can't avoid the suffering, just debate who bears the brunt of the suffering. Clue, it's not the bankers.

  • Comment number 6.

    no mention of the 4 billion a year that goes to mainly millionaire landowners merely for owning land nor any land tax?

    the equestrian class not really rowing on the oars are they?

  • Comment number 7.


    Even allowing for not being able to function freely, due to mortgaged souls on the way to power, these little boys have no idea where they are - the map does not exist. Its a blagfest of massive proportion - proof of the psychopathic qualities of the practitioners.

    Oh - its all going awfully well, dontcha know.

  • Comment number 8.

    I thought the most poignant moment was when George Osborne announced that the Civil List payment to the Queen and her Household had been frozen at £7.9m and that inflation had eroded its real value dreadfully. My heart rose to read that it had, in fact, been topped up by the Civil List Reserve. My heart then missed a beat to find that the Reserve was now as low as £8m odd and money was running out this year. I then felt tremendous feelings of pride to read that from 2011 Her Majesty would be funded by a new arrangement from the other shed load of taxes he went on about which would be efficient,accountable and dignified.

  • Comment number 9.

    In so far as I have managed to digest the budget seemed reasonably balanced and within the confines of general expectation.

    Nothing radical in there unfortunately, but there again, my idea of radical is probably not even on the radar of most peoples perception of 'radical'.

    The budget for me was the economic equivalent of watching a flea circus perform competently on the back of an elephant. The elephant being representative of the underlying global economic and physical factors oft refered to here and increasingly at play in the real worls as oppose to the cyber world of financial markets.

    I am sure the flea circus will continue to perform adequately for most traditional comentators and economists... until the elephant decides to take a bath that is sometime in the near future.

    Argentibna to win comfortably tonight.

    Still not sure about England but on balance it is probably likely to be an excrutiating game for England fans culminating in a last gasp scrappy england goal followed by a further 5 minutes of emotionally draining defensive England incompetance but just holding on for a narrow win after Slovenia hit the post twice and have a goal disallowed in the last few minutes.

    I can hardly wait.

  • Comment number 10.

    The father-in-law has crammed lots of booze into the cupboard, brimmed the tanks on the Honda Jazz and settled his tradesman's accounts early to ward of the VAT hike that never came ( at least today).

    For the next few days I expect short queues at the garage and the off- license, but maybe not the bookies.

  • Comment number 11.

    #1 tawse57 wrote

    'They bottled it on Capital Gains Tax - all that talk of 40% and it is just 28%.'

    David Cameron bottled it, all the talk of a tough budget designed to pay down the national debt by the end of next week evaporated in the face of a bit of opposition by some private equity bods.
    DC is pinning his hopes on the public sector exploding into strike mode and alienating the general public in order to get GO's planned cuts through, sensible and popular opposition to his plans will see that plank of his objectives dissolve as well.
    PW'ed by Obamah over BP, Stitched up by his PE mates in the city, if he doesn't get his own way over spending cuts then I fear he may turn vindictive (it has happened before with (allegedly) inadequate leaders).

    England team, let loose from the confines of micro-management, play as a team and take Slovenia apart, 3-0 will look like the Slovenes got off lightly. Algeria to beat USA 1-0 and England qualify top of group C with Algeria runners-up.

    (I believe in the England team even if no-one else will)

  • Comment number 12.

    No sign anywhere in the forecasts and figures of the £200 bn QE monetary boost. Anyone know where it is?

    Output Gap theory : an economic theory being relied on by Mervyn King to keep interest rates low when inflation is high and used by Sir Alan Budd to estimate lost capacity and future trend growth leading to estimates of future revenue - it looks very important but not many commentators talk about it. Hope you can give it your Idle Scrawl treatment.

  • Comment number 13.

    I believe in england too!

    Or at least i want to!

    As for the budget - not great, but i have to say i'm glad the lib dem 'fig leaves' were there, as its clear the Tory worse-than-vermin would have 'poor on toast' given half a chance. I haven't got the intestinal constitution to read the Tory blogs but I'm sure they're seething.

  • Comment number 14.

    So those people on Housing Benefit who are unemployed for over 12 months will see their HB cut by 10%, yet if you are a home owner and you lose your job then your mortgage is payed for up to 2 years...In fact wasn't it extended to 2.5 years just before the election? There is no doubt that the Government is using the fig leaf of the deficit to introduce some pretty dodgy ideologically based "Hammer the underclass" measures in this budget. I also agree with those who have drawn attention to the move from RPI to CPI for benefit and tax credit increases when they say that its a way of sneakily lowering the value of these benefits over time without having to come out and say that is what you are doing. It seems that the last Government had their Stealth Taxes and this lot have their Stealth Cuts...

  • Comment number 15.

    I think he wielded his blood-soaked axe with some finesse.

    Unfortunately, doing the right thing when every other nation* is cutting back hard will be a disaster. Where is the lifeblood for an enterprise-led recovery when domestic and export markets are shutting up shop?

    *Every other nation apart from the US, which is so high on debt and printed money it's not even bothering with a budget this year!

  • Comment number 16.

    I agree with Paul in his piece last night.

    It is the growth figures that underpin all this, if you dont believe those the whole thing collapses.

    Those projected growth figures look extremely optimistic to me for an economy like ours which has been fuelled by consumer debt and now by government debt. There will be some claw back sure but does any sane person really believe that the private sector will replace and improve upon the turnover created by 20% of government spending which is about to be cut accross the board?

    If you were been optimistic you would say 'in time it may' but not in the timescales the figures suggest in the backdrop of aglobal economy that is now growing but not much and is about to be constrained again by comodity prices, oil in particular.

    It does not stack up for me, but it does 'kick the can' a little further down the road.

    to promote growth through increased exports

  • Comment number 17.

    I tend to agree with many of the earlier posters that the rise in Capital Gains Tax was a strange animal as we ended up with an upper rate of 28% which bears no real relation to anything. The move that most caught my eye was the change in the uprating of benefits from the Retail Price Index to the Consumer Price Index. Accordingly I looked this move up on the authoritative notayesmanseconomics web blog and his analysis is.
    "What the Chancellor is saying is that benefits from next year will go up by the (usually lower) CPI rather than the (usually higher) RPI. I hope that you are beginning to get my point in that this is a downgrade which will lead to benefits, tax credits and public sector pensions going up more slowly in the future. Whilst there are issues over public sector pensions and their cost this almost subliminal downgrade is not the way to do it and of course it pre-empts the Hutton Review. For benefits and tax credits this is an outright cut in future payments in real terms. He is hoping that this will be considered something complicated and arcane and that the full implications will not be focused on."

    This is all rather concerning as I notice that he feels this will spread over time to other types of pension and other areas. [Unsuitable/Broken URL removed by Moderator]

  • Comment number 18.

    The most pertinent fact appeared for 15 seconds on the BBC last night (was it you on Newsnight or Stephanie on the Ten O'Clock news?).

    The forecast is dependent on private industry filling the space made for it, and on an export-led recovery.

    Firstly, what exports? To who?

    Secondly, what private investment (which has plunged since the recession started, as what sensible employer would invest in these times) and what private demand (at a time of wage deflation and job losses)?

  • Comment number 19.

    The only view one can take on this budget is that it is work in progress. The fiscal deficit and debt is so big that neither are going to go away for rather a long time.

    There seems to be a presumption around that such a major adjustment in our affairs could be made without hurting. This is major surgery and such is dangerous but one has to measure that against the alternative. There is a lot we can gain: but that has to be qualified as eventually.

  • Comment number 20.

    Output gap theory update : Andrew Sentance of the BoE voted in the June MPC to increase interest rates casting doubt on the future dampening impact of spare capacity on inflation. If right , Sir ALan Budd's views might well need to be reviewed as would the continuing overshoot on the inflation target and the future path of interest rates etc. Rather important, this.

  • Comment number 21.

    filled up the tank and he leaves fuel alone...somehow I feel cheated


More from this blog...

Latest contributors

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.