Things we discovered today.
The government is going to borrow £245billion more than they said in 2010, the economy has grown by 0.7% since 2010 as opposed to George Osbourne's projection of 5.3%.
The Office of Budget Responsibility (OBR) has since it's inception by this government has repeatidly over stated the level of growth within our economy. It is now projecting growth of just 0.6% for this year.
The governments mantra is we cannot borrow our way out of this, is exposed by the £245billion figure, infact the reason given for our AAA rating was moody's could not see how we were going to generate wealth to pay the deficit down. This government is already borrowing more because of rising debt charges and – as the OBR says – tax receipts falling as a result of our weaker economic performance.
These falling tax take is due to stagnating wages and income, this looks like continuing for the two years, with businesses not being able to access finance or wish to lower risk this also is driving down living standards, with business contracting and individuals real incomes stagnating, then the government needs to invest. Instead of the extra £254 billion for funding failure, this should be used to allow the economy to grow through improvements in infastructure. The proposed extra £3billion today is less than 1% of GDP.
The red book issued alongside the budget reveals that the bottom 10th of households will be worse off by £200 overall in 2013-14, compared to 2010. The next 10th will be hit even harder, losing £250. Only the very highest 10% of earners lose more, around £1,600. The reality is that the cuts in direct taxes, such as the personal allowance, are entirely offset by rises in indirect taxes and the loss of tax credits and benefits.
The governments proposals on home ownership I hope offers those who wish to buy the opportunity to do so. However the government refuses to do anything on social housing, with the introduction of the Bedroom Tax and lack of alternative housing options will cause some hardship.
The government could have changed the borrowing rules for local councils to build affordable housing, but chose not to.
Unemployment for the young is a real problem and we cannot afford a lost generation. Just this week youth unemployment was up by 48,000.
From where i stand in Shepton, this budget will not dramatically change the economic outlook, we face a lost decade, the next government will have the same outlook as this one, they have failed to tackle the deficit and grow the economy.