Thanks for nothing, Darling

Alistair Darling put a brave face on things today - but there wasn't much for business to shout about.

by
Last Updated: 31 Aug 2010

In a fairly uninspiring Budget speech today (it was hard to disagree with David Cameron’s verdict that it was delivered ‘with all the excitement of a man reading out a telephone directory'), Darling admitted that economic growth would be lower than expected but claimed that Britain was in a better position than most to withstand the gathering economic storm. And naturally, put up taxes.

Although big hikes to duty on alcohol, cigarettes, and high-polluting cars will probably dominate the headlines, the message to UK plc wasn’t a great deal more positive. The CGT hike to 18% was confirmed – albeit with the ‘entrepreneurs’ relief’ (not the kind that Eliot Spitzer swears by), the corporation tax rate for small business will rise, and the rules on income shifting will change – raising an extra £1bn for the Treasury coffers at a time when most small business are worried about falling profits. And the Chancellor is ploughing ahead with his controversial non-dom plan.

The broader economic picture was gloomy, though the Chancellor suggested it wasn’t as bad as some have suggested. He blamed our current economic woes on those naughty foreign types, particularly those in the US mortgage market. But although he’s had to cut growth forecasts again, and he’s going to come within a whisker of breaking his golden rule (that public borrowing should never exceed 40% of income), he insisted that the UK was better placed than anyone to withstand a global slowdown. Naturally, the Tories begged to differ.

There was some good news: the headline rate of corporation tax will indeed drop to 28%, and there was some additional tax relief introduced for investors. The government also wants to increase the amount of public sector contracts that go to SMEs, and has recruited private-equity grandee Anne Glover to look at ways to boost the number of female entrepreneurs (albeit with a measly £12.5m fund that will barely keep her in stationery). And the pound also rose, chiefly because the Government has no plans to change the Bank of England’s inflation target – meaning interest rates aren’t likely to fall any time soon.

Judging by the fact that he used the word ‘stability’ about 143 times during the first five minutes, Darling was presumably trying to give the impression of a steady hand at the tiller. The problem is, that’s hard to pull off when his boss was partly responsible for steering us into the current choppy waters in the first place, by not putting some pennies aside for a rainy day…

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