The economy is still reeling from the impact of the Chancellor’s previous budget.
Business confidence collapsed even months before that when, during preceding summer, we were warned that things were bound to get worse before they got better. Then, when the budget eventually came, it was even, even worse than expectations, with its wholesale assault on enterprise, investors, family farms and family businesses, as well as employers of every kind.
After that budget last year the Chancellor insisted that she had ‘stabilised’ the economy and that, from then onwards, its stewardship was entirely down to her, and that she would not be back for any more tax increases. Throughout the last year the Government has trumpeted that it had achieved the fastest growth rate among the G7 nations– but that is what it inherited, and as the year passed, that growth became ever more anaemic: last month the economy actually shrank.
The Chancellor made exactly the same mistake of collapsing business confidence prior to this budget, in the way that she did before her last one: She spent the summer breeding uncertainty by flying all sorts of kites as to what sort of tax-hikes might be in the budget.
This behaviour is hugely unhelpful, it affects employer hiring and investment plans; it moves some markets whilst freezing others; and it increases the cost of servicing our debt.
That’s why we used to have pre-budget ‘purdah’.
And against that background, throughout the year, there has been the ever-present chilling effect of the huge extension of trade union power set out in the Employment Right’s Bill which is currently going through Parliament.
No surprise therefore, that unemployment has risen every month since the last budget and now stands at 5%, with vacancies sharply down.
This anti-growth agenda is only half the story. The other half is that the government is over-spending, even its bloated plans overshot by over 4%.
Prime Minister’s very modest proposals, only to slow down the accelerating growth of the benefits bill, ended in a disastrous climb-down..
Now the total benefits bill stands at £300 billion annually, £212 billion of which is for inactivity due to sickness. 4.3 million people are on benefit and under no obligation to seek work, and that figure is growing by 130,000 per month, – adding one and a half million more people to ‘benefits street’ every year.
The Chancellor’s response yesterday; was to announce even greater bounty: Billions more on benefits.
To pay for it, the Chancellor’s Smorgasburg measures increasingly single out the minority who are already contributing the most: the entrepreneurs and the investors who can take their vision, their skills and their wealth elsewhere to places where there is a more business-friendly climate: And they are doing exactly that, they a leaving in droves, even the Secretary of State for Business has admitted it.
The Chancellor is killing the Goose. We are going to be left with the unsustainable position of more people claiming benefits than are paying for them.
The choice she made was to increase benefits at the expense of even higher taxes, we now have the highest tax burden in our history
The great danger of the inexorable growth of the state, now accounting for 45% of our economy, has turned out not to be the totalitarian fist raised in anger, not so much Hayek’s Road to Serfdom, rather, it’s turned out to be an open hand dishing out largess, it’s more of a Road To Penury.