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Budget bore provides little clarity for business

Posted by on March 30, 2010 9:28 AM | 

Alistair Darling's eagerly awaited Budget was significant more for its omissions than its headlines.

The dreary set of statements were reeled off with the enthusiasm of a condemned man who knows his time on Threadneedle Street could be up.

First, though, the positives. The £2bn cash injection for green projects will be welcomed by Teesside's high-tech manufacturers and process sector chiefs.

Coming hot on the heels of the Nissan Leaf announcement, it's another golden opportunity for Teesside's energy supply chain to win new work that will help to offset the raft of job losses and plant closures in the area.

Another positive was the £11bn undershoot in borrowing, which in theory should reduce the need for radical post-election tax hikes such as a rise in VAT.

The surprise extension of entrepreneurs relief on capital gains was a feather in the Chancellor's cap - as was the new growth capital fund for smaller firms seeking a £2m-£10m capital injection.

But the rise in national insurance contributions remains the real pocket-hurter, even though it is set to rake in £3bn-£6bn for the Treasury.

It's exactly the type of policy that could tip the country back into recession and make the chancellor's bullish growth forecasts yesterday - output to grow by 1%-1.5% this year and 3%-3.5% in 2011 - look foolish.

The tax on wealth creators was also a smack in the face of entrepreneurship.

People earning more than £100,000 a year will see some of their personal allowances removed, while salaries above £150,000 will be subject to 50% tax.

The worst effect of these measures will be to dissuade entrepreneurship and drive our best wealth creators abroad.

If that happens, the Chancellor could find that the overall tax grab goes down, not up - putting another dent in Britain's beleaguered finances.

What businesses wanted was a clear statement of intent by the Chancellor that would help their long-term planning and encourage them to invest in new plant, machinery and staff.

They didn't get it. There was no Government pledge to boost spending on vital infrastructure projects. A credible plan, clear-cut plan to reduce the public deficit failed to materialise.

Using money from the sale of trophy assets to fund infrastructure projects, a sensible idea mooted by the Royal Institution of Chartered Surveyors (RICS), was not given a mention.

And fierce lobbying for the NI hike to be postponed until the economy was in better health came to naught.

The Chancellor was never likely to announce big giveaways with an election around the corner and public finances on the rocks.

The damage was done much earlier by the Government's failure to control Britain's crazy pre-recession spending boom.

Now the good days are over and Mr Darling's last big pre-election announcement could well be the final nail in his - and the Government's - coffin.

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