Today’s pre-budget report presented by Chancellor Darling has taken most of today’s headlines, with politics seeming to overtake economics this time round, obviously with an eye on next year’s General election.
There are some vote winning measures, such as the tax on banker’s bonuses (which may not actually hurt the banker’s themselves, but could cost the banks more – and don’t forget several of them are tax-payer owned), the state pension is to rise by 2.5% (but inflation will eat into this rise) and the biggie, tax on bingo is being reduced from 22% to 20%, securing the vote of thousands of blue-rinsers throughout the country.
It was kind of relieving that VAT will only be returning to its “normal” level of 17.5%, after there had been a thought it could go as high as 19%, which is pretty much the average throughout Europe, but the 50p tax on broadband was confirmed, which will probably more of a niggle than a major point of contention.
Of course, the increase in income tax rates won’t be popular, but this has been delayed until 2011, when the election will be a distant memory and the next Government will be only halfway through its term. Similarly the freeze in public sector pay will only begin in 2011 (and of course, this doesn’t extend to the armed forces – that would have been a very unpopular move, and is nothing compared with the 5%-15% cuts announced in today’s Irish budget speech).
All in all, it was a pretty dour speech, with an apparent lack of measures intended to immediately tackle the UK’s spending deficit.
There’s plenty more expert analysis around, here are some good reads:
- BBC: Pre-Budget Report: At-A-Glance
- Stephanie Flanders: The Budget that has barely budged
- Telegraph: Pre-Budget report: it is not the bankers who will pay the most, but normal workers
- Telegraph: Pre-Budget Report Winners and Losers
- Moneysupermarket: Pre-Budget Report 2009 At-A-Glance
- Guardian: What The Experts Say
- MoneySavingExpert: What the Pre-Budget speech mean for you
What are your thoughts – was this pre-budget speech an election cop-out or a considered reaction to our troubled economy? Let us know in the comments below.
photo credit: Ben Sutherland
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