In the News - Budget 2009

Reactions to the 2009 Budget

The morning after the day before and strong reactions to the Chancellor's 2009 budget ('In the News' yesterday) are emerging, predominently negative.

The Economy

The International Monetary Fund seemed to question the Chancellor's predicitons of economic recovery, saying it believed the UK will decline 4.1% this year and fall again by 0.4% next year. The Chancellor said he expected a 3.5% fall in GDP this year followed by growth next year (Guardian.co.uk).

The Institute for Fiscal Studies said they were "surprised" at the scale of the economic problem and that spending cuts and tax rises would be needed to tackle public borrowing (Guardian.co.uk).

David Cameron (leader of the opposition) said the government planned to borrow in 2 years what all the governments since the formation of the Bank of England 300 years ago had borrowed put together (News.bbc.co.uk).

An economic advisor at the accountancy firm, Deloitte said he thought it could be 30 or 40 years before the level of UK debt returned to its pre-recession level of 40% (Guardian.co.uk).

Experts across the City accused the Chancellor of being too optimistic about economic recovery (Guardian.co.uk).

Despite the Chancellor's emphasis on spending our way out of recession, many pointed out that the Chancellor's restrictions on public spending growth were actually harsher than at the time of Margeret Thatcher and amounted to £10 billion of cuts (Guardian.co.uk).

Housing:

The National Housing Federation said that the Chancellor had not gone far enough to back housebuilding (Times Online).

The National Association of Estate Agents said the budget announcements were largely ineffectual and criticised the lack of help for first-time buyers (Times Online).

The Royal Institution of Chartered Surveyors was worried that the stamp duty holiday on homes under £175,000 could harm the bottom end of the housing market when the tax comes back next year (Times Online).

The UK's largest building society, Nationwide, dismissed the extension of the stamp duty holiday saying it would only benefit parts of the country (Times Online).

The estate agent, Knight Frank dismissed the money for the government's shared equity scheme, saying that it will only help 3,500 first-time buyers which was a small number considering 10,000 first-time buyers managed to buy without help in February in a difficult market (Times Online).

Pensioners and families

Age Concern and Help the Aged said the budget would only help a few pensioners and would allow millions to go further into poverty (Guardian.co.uk).

The consumer group, Consumer Focus said the 'green' energy meausures, particularly on energy efficiency, had not been enough and would still leave millions struggling with fuel poverty (Consumer Focus).

End Child Poverty called the £20 increase in child tax credit "shamefully small." And the Child Poverty Action Group called it "a pittance" and "disgraceful" (Guardian.co.uk).

Jobs

Generally speaking the measures for the unemployed (training and working placements and investment in job centres) went down well with the unions. Although the TUC accused the government of not being as determined to help the unemployed as it had been to help the banks (Guardian.co.uk).

Employers' groups were less positive. The British Retail Consortium said the so-called "budget for jobs" had done little to help retailers keep people in work. The Engineering Employers' Federation said the government was being shortsighted by not doing more (Guardian.co.uk).

Cars

The government's scrappage scheme has been broadly welcomed by the car industry, although it has now emerged in the small print that the £2,000 for trading-in a 10 year old car for a new one will actually be £1,000 from the government and the car industry will have to fund the other £1,000 (Guardian.co.uk).

The motoring organisation, the AA said that with the "shock" increase in fuel tax meant the government was giving with one hand and taking away with the other (Guardian.co.uk).

Tax

The Institute for Fiscal Studies said that the tax increase on people earning over £150,000 could actually lose the government money as higher earners may simply declare less income for tax (Telegraph.co.uk).

Some City experts have warned that the tax on high earners could lead to a "brain-drain" as the wealthy leave the country (Telegraph.co.uk, Guardian.co.uk)

Climate Change

Greenpeace pointed out that the money in the 2009 Budget for renewable energy and energy efficiency was only marginally more than the government used earlier in the year for Royal Bank of Scotland bonuses (News.bbc.co.uk).

Budget Quotes:

Our Budget Quote of the Day: "Mr Darling has used a water pistol to try to put out a fire” Peter Bolton King, chief executive of the National Association of Estate Agents. (Times Online).

For more quotes on the Budget collected by the BBC, click here.

Posted by Plebble Admin at 11:43 on 23-Apr-2009