As George Osborne holds up the battered red briefcase on March 19th, will he be genuinely smiling for the cameras? Or, will he be putting a brave face on another round of austerity measures?
What would I like to see? Well as Jelf Small Business help mitigate the risks that small businesses face every day we’d like the chancellor to do the same. That means making it easier to start up, easier to find funding to grow and easier to make money.
Success will likely be claimed in reducing the deficit and in offsetting the growth that we are now seeing, but as ever, there’ll be a mix of measures to both continue to reduce our deficit and to stimulate the economy. With a general election to come in 2015, a nod to reassure Conservative voters would be also expected. So what might this look like?
Osborne has branded 2014 as “the year of hard truths”, but with the UK’s economy finally growing once more, some commentators are predicting imminent tax breaks. A higher personal allowance is a huge carrot for the electorate before a 2015 election, although the long-suspected reduction in the top rate of tax is likely to remain a politically-sensitive measure.
Perhaps more likely is an increase in the threshold for the 40 per cent rate of tax. With wages likely to grow as the economy takes off, more of the middle classes will see this as a personal tax on them – increasing the limit and putting more money in their pockets is a clear way to secure votes from your own supporters.
Cuts are still likely though. Bringing the deficit down has always been this government’s objective and there is more to do in this area. These savings are unlikely to come from politically sensitive areas such as schools or the ring-fenced NHS budget. Perhaps the residents of James Turner Street will be hit again – although, as many in full-time work remain supported by welfare payments, any cuts will undoubtedly hit hardworking, low-income families too.
The wider question is whether the welfare budget can take any further cuts. Forty-seven per cent of the UK benefits budget is spent on state pensions. Although we’ll all be expected to work longer, the state pension has steadily increased and this goes a long way to explaining why auto-enrolment is such a big drive for the government. With an ageing population, politicians need to keep these voters – who are increasingly worried about their retirement – onside and the pension budget clearly needs more support from personal investment.
Businesses remain key to the economic recovery and we might expect incentives to help small businesses invest and export more. The reform of the banking industry and the lending market hasn’t yet helped free-up funding for small businesses looking to grow, and this should be an area the chancellor looks to assist.
Unemployment has been falling, although in areas still under the cosh – such as manufacturing, engineering and construction – there will likely be measures to encourage employers to take on new staff and to try to stimulate further growth in these sectors.
With youth unemployment being one of the key issues facing the UK, wouldn’t it be great to see the chancellor give businesses incentive to employ young people or create apprentice positions?