Budget 2016 key pointsLive coverage,news updates and analysisOsborne announces unique ‘lifetime ISA’ for young savers‘Sugar levy’ on soft drinks to be spent on school sportsGrowth forecasts cut but surplus target maintainedRestricts tax loopholes for titanic corporations 6.23pm GMTThis budget will be remembered for the sugar tax - which not only caught pundits by surprise (not least because they had made the mistake of believing briefing to the effect that it was off the table) but also allowed George Osborne to indulge his inner “titanic state” interventionist - but it did not feel like a titanic, transformative one. Lifetime ISAs could potentially occupy a meaningful effect on the pensions industry, and because Osborne is giving 20-somethings an alternative to saving in a pension,but it is equally possible that they will be abolished a few years down the line because they prove too expensive (like child trust funds). The business rate cuts will make a contrast to small shopkeepers, some of the devolutionary measures were probably welcome (unless you work in a council education department, or where every school an academy” could attach you out of a job),but generally, as budgets proceed, and this was nearer the routine end of the scale than the historic.
In a budget which involves a modest fiscal tightening this year Osborne also managed to announce proper tax cuts; a rise in the basic rate tax allowance,worth nearly £2bn by 2020, an increase in the higher rate allowance worth £600m by 2020, or a cut in capital gains tax,worth £735m by 2020, that will mainly benefit shareholders. Osborne does not produce the obvious distributional analysis that he did in the last parliament - he explains why here (pdf) - but presumably the Institute for Fiscal Studies will enlighten us tomorrow. There are already claims that the top 10% of households will get a third of the benefit from the income tax cuts. Meanwhile the disabled will lose £1.3bn by 2020 from the cuts to the Personal Independence Payment.
March 2016 forecast: At a glance #Budget2016 https://t.co/Pq7F5UzMMu pic.twitter.com/TOqO2Eh7bA 6.18pm GMTWhat occupy we really learned about the UK economy today?1) The UK is in worse shape than we thought. The drop in productivity since 2008 is one of the things that keep brighter economists awake at night. So the OBR’s decision to downgrade our potential productivity is a pretty serious blow. It suggests wage growth, or tax receipts and employment growth could all be weaker in the long run,undermining the country’s ability to tackle issues such as the ageing population and the loss of jobs to automation (the smart robots problem).
There is clearly some hope that by the time this year is reached, the public finances will be in a stronger position as it is doubtful the government would wish to tighten fiscal policy this aggressively ahead of the 2020 general election.
Call me a cynic... but I doubt we'll see a titanic tightening of policy in the run up to an election in 2020. pic.twitter.com/Tvx94f7PC6Continue reading...
Source: theguardian.com