What we saw last Wednesday was, by a considerable margin, George Osborne’s most impressive budget. The Chancellor’s Commons set piece, in terms of both content and delivery, was substantive, sure-footed and – here’s the clincher – actually stood for something.
The package of measures in Osborne’s fifth annual red-box wielding ritual were clearly designed to promote business investment, boost foreign trade and unlock pension savings. For once, no post-budget spin was required. The Chancellor has expressed some strong opinions and developed some policies you can hang your hat on. Good – and it’s certainly been a long time coming.
While the microeconomics of Budget 2014 (the individual measures) contain much that is laudable, the bigger macroeconomic picture remains dire. I’m glad Osborne has put his thinking cap on and finally decided to do something. But I remain extremely concerned about the UK’s broader budgetary stance, our massive (and still fast-expanding) national debt and the lack of determination when it comes to rescuing Britain’s public finances from their current parlous state.
George Osborne promised a “budget for business” and that was largely what he delivered. There was a lot in the Chancellor’s fifth budget to please the business community and, on first reading, few specific measures to cause alarm.
Osborne deserves credit for limiting himself to a fiscally neutral package, despite a strong uptick in growth. Even though the Office for Budget Responsibility raised its 2014 growth forecast to 2.7pc, up from 1.4pc at the time of last year’s budget, the Chancellor’s measures amounted to a tiny £0.5bn giveaway in 2014/15, and a small fiscal squeeze over the next 5 years as a whole.
If you watch The Apprentice, you may think that running a business is all about fast-talking and posing in designer clothes. In the real world, limousines and killer heels have little to do with creating a thriving enterprise. Commercial success stems, instead, from insight, courage and hard graft.
I’ve come across all these qualities and more in recent weeks, while getting to know four unsung heroes of British business. Rather than sitting in plate-glass buildings, they operate at the sharp end, plying their trade in prefabricated huts on drab industrial estates or even on their own kitchen tables.
For all the fanfare of hosting this week’s G8 summit, the UK remains locked in a dire economic predicament. For all our gloating at the Eurozone, Britain’s national income is still well below its 2008 peak.
Other “leading” Western economies are performing much better. While Germany and the US are also yet to stage a truly convincing recovery, the GDP of both is now well above pre-crisis levels. Yet the UK’s nominal GDP remains 4pc below where it was at the time of the 2008 Lehman collapse.
The British economy showed a glimmer of improvement last week. The UK’s composite PMI index, a measure of business confidence as reported in surveys from large and small firms, rose from 51.1 in February to 51.4 in March. With readings above 50 indicating business leaders think their sector is growing, this looks a decent result.
The detailed figures show, though, that the UK is failing to “re-balance” away from fickle consumption to towards solid investment-led growth. The Manufacturing PMI index edged up from to 48.3 last month, this key sector continuing to contract. The Construction PMI sub-index was even more moribund, inching forward to just 47.2.