Every year in the UK we have an annual budget by the Chancellor of the Exchequer, publically and ceremonially presented with fanfares galore, which beforehand is widely pontificated upon, predicted, and disgustingly even leaked.
We have had Chancellors for about eight hundred years now, and use of the Budget ‘Red Box’ carrying the budget to Parliament started some hundred years ago – and the Budget Day announcement telling us all what the government is ‘intending’ to spend & tax has been going on for untold years, It happens these days on a Wednesday in March, and is of particular interest to Joe Public because it is when generally additional taxes are imposed on us!
So what the hell is the Autumn Statement then? Well these days it is really a SECOND budget isn’t it? Who the heck brought that in then and why? Well it used to be only a financial statement and in the early nineteen eighties Tory Geoffrey Howe delivered the first one, replaced by others with a Summer version, and then a Pre-Budget Report, and now George Osborne’s mini-budget type.
Today’s Statement was important for the Conservative led Coalition Government. Why? Because we have a General Election coming up in five months time –so it is a good moment probably for the ‘give aways’ or presentational justification of economic policies, isn’t it? Don’t get too excited everyone will you, as it is all smoke and mirrors really you see? That is politics in this advanced media age, isn’t it? Don’t bother to try and work out how it benefits you.
The headline grabbing national fiscal ‘recovery’ claim is a façade of course, but a well disguised one, don’t you think? The Government’s strategy has not really brought the Country into better shape at all, has it? Britain’s finances are in the cacky, thought the Government continues to claim the opposite don’t they? You see these guys at the top get away with it by generating a mesmerising shed load of misleading figures and rely on the rest of us not to really understanding public finances.
You don’t have to be any kind of economist or in the least financially trained to understand the basic truths of control of money (as well all do it in our daily lives).
If you say were in the UK fruit industry you might be a grower perhaps. Things are bad and your income doesn’t cover your expenses – that is called a ‘deficit’ and represents the money you have to borrow from your bank and each year adds to your total overdraft – this is called your overall ‘debt’. If you have two apple trees then you can cut down one of the trees to reduce your outgoings, as all costs will be cut in half in looking after it and gathering fruit etc – the offset is that you only then have half the number of apples to sell so your income drops. Perhaps that doesn’t work then does it? What about borrowing to buy another tree to increase your future crop?
Perhaps you are an apple seller instead. Things are bad and your income doesn’t cover your expenses so you are also in deficit and have to borrow and increase you debt to the bank. You normally buy two boxes of apples a day to sell. You decide now to buy only one box of apples to reduce your cost outgoings – the offset is that you only then have half the number of apples to sell so your income drops. Perhaps that doesn’t work then does it? What about borrowing to buy another box to increase your sales?
In the United Kingdom the Coalition Government set out a Plan A to eliminate the annual Deficit by this year (2014) by aggressive austerity in one parliament (when the Labour guy Alistair Darling said it would take two). Subsequently, Osborne said ‘oh dear’ so by next year 2015, and then today he secretly admits Darling was right, so 2019. OK, so far they have failed miserably with the reduction game of course (without reasonable explanation) and are only half way there – even with fiddling the measurement figures! This year’s deficit is predicted to be increasing again and the actual total County’s Debt will DOUBLE as well. All different from the actual Budget last March so what confidence can any of us now have in their plans and forecasts?
What has gone wrong here then? Well the game plan was to cut the outgoings, wasn’t it? So we all suffered? There are a couple of spends to look at – the day to day ones and the capital investments (like big construction projects). The latter is an investment equivalent to the apple tree and the extra box of apples mentioned above. Capital projects got axed ruthlessly.
We don’t need to know a lot about budget things to understand that since the Government’s tax income has apparently dramatically dropped through the floor during their tenure (slow growth for four years and continuing low wages and spend that simply cutting Government expenditure has failed to cure the Country’s ongoing financial demise.
The 2014 Autumn Statement’s claims of financial good sense giving achievement, and the ongoing promise of our Country’s future stability may well have been a mistake by Osborne, as it is being widely taken apart by the media vultures, and even ridiculed by the suffering electorate perhaps?
Take the supposedly intended vote winner of house stamp duty changes – it will probably bring in more tax revenue (much later), but will it solve the major problem Britain faces of lack of housing and hazardous price escalation, or will it throw petrol on an already out of control blaze?
[Is ‘Deficit reduction’ a driver to the UK’s economic success OR a driver to decades of financial failure as demonstrated by Japan and predicted in 2010?].