Cancel the Budget! Quick.
Reports this morning suggest that April’s Budget will not be used to launch a second fiscal stimulus (large scale tax cuts). Mervyn King has issued his warning against it, Alistair Darling and the Treasury were apparently always slightly nervous over it and Gordon Brown has, it seems, been cornered into ditching his plans.
So what’s left to do on Budget day apart from run down all the appalling economic news re deficits, public borrowing and shrinking GDP?
In fact why have the Budget at all. One tried and tested use of the Budget is to announce stuff you’ve already announced in the hope we all think its something new. We should beware of that particular ploy this time around.
I guess the other thing the chancellor could do is tinker with tax structure so that certain parts of the economy receive a boost that they have so far lacked. this would have to be fiscally neutral, given the current state of things, but it might help flagging industries.
However, I can’t help but agree with Dennis Turner, chief economist at HSBC, who says we need to start thinking about restructuring the economy so that we are not dependent on the sectors that got us into this mess – housing and financial services.
In short the economy needs rebalancing. So perhaps that’s what it’s going to be about.