Budget: The Think Tanks’ Verdict

Hammond appears to have avoided a Halloween horror show with several popular announcements including a freeze on beer, cider and spirits duty and bringing the income tax threshold rise forward to next April. However, fiscal hawks are alarmed at the rate of fiscal expansion. Here’s what the wonks made of it…

The Centre for Policy Studies is happy for now but calls for a more radical Budget post-Brexit:

“The focus on the end of austerity, giving hard working people more money in their pockets through tax cuts for 32 million people, and the largest ever increase in NHS spending without any rise in personal tax are hugely welcome. However we hope the Government pushes a more radical agenda that delivers for ordinary people once the Brexit deal is complete.”

The TaxPayers’ Alliance is broadly positive but calls for more serious tax reform:

“Increases in the personal allowance and higher rate income tax thresholds, with freezes to taxes on beer, cider, fuel and short-haul flights, will give much-needed breathing space to hard-pressed taxpayers. That said, the tax burden overall will be still be increasing. And to truly seize the opportunities afforded by Brexit, we should be looking at a much more serious and overdue reform of the tax code.”

The Adam Smith Institute is significantly less impressed, calling it a “botched budget”:

“What the Chancellor gave with one hand though, he took with the other as he hit firms large and small that make capital losses by restricting their exemptions—meaning less risk taking, less profit and fewer economic dividends… A digital revenue tax—lifted straight from the Corbynite playbook—will punish the millions of people who shop online and use online services every day.”

The Institute of Economic Affairs also takes aim at the “Fiddly Budget”:

“More broadly, it was a Budget littered with spending commitments across the board. In an attempt to signal the ‘end of austerity’, it appears this government has given up on deficit elimination… Fiscal responsibility is being sidelined, giving way to short-term giveaways and unaffordable pledges.”

As the Office for Budget Responsibility points out, the Government would have been on course to balance the books by 2023 with the unexpected fiscal windfall this year, but has spent it all already:

“Buoyant tax receipts and an improved outlook for employment have delivered the Government a significant fiscal windfall since March, sufficient to deliver its objective of a balanced budget by 2025. But this had already been swallowed up by the Prime Minister’s promise of more money for the NHS in June, to which the Chancellor has added a further near-term tax and spending giveaway. This leaves the medium-term outlook for government borrowing little changed since March.”

Balancing the budget was meant to be this Government’s fiscal priority, yet this Budget puts it firmly on the back burner…




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Quote of the Day

Dominic Raab wrote in his letter of resignation…

“This is, at its heart, a matter of public trust,” he told the PM, concluding: “I cannot reconcile the terms of the proposed deal with the promises we made to the country in our manifesto at the last election… I believe that the regulatory regime proposed for Northern Ireland presents a very real threat to the integrity of the United Kingdom. I cannot support an indefinite backstop arrangement, where the EU holds a veto over our ability to exit…”

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