A survey by KPMG has found that only one in 100 businesses around the world think that governments should be raising taxes in order to repair their battered public finances; the suggestion is that they should focus on spending cuts instead. It's an interesting debate, but this particular revelation doesn't strike us as massively ground-breaking - after all, what kind of self-respecting capitalist enterprise would wish to sacrifice profit for the sake of propping up the public coffers?
Government debt is clearly a big worry for corporates these days (a view which the survey found to be supported by 72% of European businesses). So something clearly has to give. But what’s it to be? Some 77% of European business leaders favour generating extra cash through cuts in public spending – a sentiment also shared by leaders in the Americas and Asia-Pacific. Asked which aspects of public spending should be cut, KPMG’s respondents favoured public sector pay as the most popular option, chosen by 53% globally, followed by defence spending (57%) and welfare payments (34%).
All of this may be music to the ears of George Osborne, who's already plotting a string of austerity measures - including a cut in public sector pay and pension provisions, plus job cuts at such establishments as his own Treasury – while at the same time cutting corporation tax. Osborne’s approach has been praised by the IMF as ‘appropriately ambitious’. And having business on board will undoubtedly be a boost to the Chancellor, given that he's about to announce some unpopular spending cuts and the Opposition is enjoying a bit of positive momentum after its change of leadership.
Delivering bad news is never a fun job, especially when those bearing the main impact are your own employees. Just ask those pour souls currently being booted out of the Treasury. If they'd been surveyed, rather than a load of private sector businesses, we may well have ended up with the view that sticking a few percent on the odd tax bill would, by comparison, not be such a bad option.