MORE than at any other time since he was elevated to his job as chancellor, George Osborne now sounds like he is fully committed to growth for the UK economy with a set of grand measures in the Autumn Statement to get things going.
Make no mistake, as the BBC’s Robert Peston quickly pointed out, this was no Autumn Statement as envisaged by Osborne; this was a mini Budget, if not a full blown affair. This adds to the sense that Osborne now feels he has to do more and that austerity alone (we know it was just austerity, but it’s a matter of balance) was not working. His critics will renew their claim that austerity was not working and that Osborne has been forced to change tack.
So we have measures to 1. Protect the economy; 2. Build the economy and 3. Ease credit.
Taking the last one first easing credit is critical. Abuse continues to be slung at the banks for hoarding money and not making a bigger effort – the chancellor had to move. So he pledged that the taxpayer will guarantee small business loans. The questions will remain about how the loans are accessed. The devil will be ensconced in the detail. If the criteria are too tough the scheme will do too little to help. If too loose the government will be taking a risk with taxpayers money.
Next the infra structure projects – 500 of them – to reinvigorate the economy. One felt that Osborne was only just held back from calling it his ‘New Deal’. Of course, it doesn’t compare with Roosevelt’s depression era efforts but all the same, something on a grand scale was called for. The question will be where the costs falls. Can the pension funds really plough £20bn into the project? Will they really find projects they want to invest in anf get the returns that they want. His Osborne finding a way to take a risk with our pensions?
Once the banks were told to lend – but the results were frankly middling. And was there a suggestion that local authorities would be allowed to borrow against future tax receipts to get projects underway. Won’t that be wracking up public sector debt again? Government will need to tread carefull on this.
Lastly, protecting the economy appears to be a duty falling on public sector costs. A day ahead of public sector strike action the chancellor urged the unions to call it off but reaffirmed his plan to cap pay rises when current pay freezes end, and he won’t change his tune on pensions. The prospect of conflict between government and public sector workers remains and we can expect disruption on the horizon.
Lastly, looks I won’t be retiring until I’m 67, on today’s announcement. There’s plenty of time for that to be raised again. Cheery thought.
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