Hunt missed golden chance to boost UK growth with his risk-free budget, says economist
Jeremy Hunt’s Budget played it safe and will not stimulate the UK economy in the way that it could have done had the Chancellor been bolder, an economist with the Adam Smith Institute has said. Maxwell Marlow, the London-based think tank’s Director of Research, was speaking the day after Mr Hunt delivered his eagerly awaited financial statement.
Key points included: an extension to younger children of the 30-hours a week of free childcare currently available to many working families with three and four-year-olds; a guarantee that the energy price guarantee will remain at its current level until the end of June 2023: the abolition of the lifetime allowance and increases to pension tax limits; and a commitment by the Government to spend an extra £2billion per year between 2023/24 and 2027/28 (£3billion in 2024/25) on defence and national security priorities.
Mr Hunt further confirmed corporation tax will rise to 25 percent next month.
Mr Marlow told Express.co.uk: “If I was to rate his budget out of 10, I’d give it 6.5 to be honest.
“He had the right ideas. He wants to fix the problems that have been very much placed on him, but he came to the wrong conclusions.
“For example, when it comes to childcare great news on the ratios, really giving parents more choice and lower the costs.
“However, the free childcare, the wrap around child care, that is robbing Peter to pay Paul.”
Referring to the fact that Mr Hunt confirmed the changes will not take effect until next year, Mr Marlow said: “Basically, it’s not going to help as much as he thinks it will, at least, and it is going to take too long to come in.
“Because this is a crisis now, a childcare catastrophe and it’s just not going to get fixed from what he’s proposed. His reforms need to be more holistic.”
Mr Marlow also welcomed the Government’s new full expensing policy, providing a new 100 percent first-year capital allowance for qualifying plant and machinery assets.
He said: “It’s fantastic, but doesn’t go far enough unfortunately.
“So any sort of capital you’re using in a company, stuff like oil rigs, you can’t expense any of that.
JUST IN: Moment Ukrainian troops blow up Russia tank caught on camera
“That would be fantastic, we want to drill more, to exploit our very large, fantastic mineral wealth in the country. So he could go further.
“Then finally the corporation tax increase is a disgrace frankly. At a time when other G7 countries are cutting rates, we’re increasing them.
“What is going on? And we’re going to see massive losses in our competitiveness worldwide – it’s very bad news.”
Asked about the impact of Mr Hunt’s budget, Mr Marlow predicted: “I think he’s going create some growth, not much, but he’ll create some growth.
“It was said that we’re going to avoid a recession because of what he’s done, which is great news.
“But it’s not anywhere near as much growth as we could have had if he’d been a little bit more radical, taking some more risks, which I know he doesn’t want to do.”
Asked whether it was a pro-Brexit budget from the famously Remain-backing Mr Hunt, Mr Marlow said:
“It is interesting. I think if you at the OBR report that came out at the same time, something that was emphasised was migration and a lot of the reason for Brexit happening was that people wanted to control migration.
“But the maths behind the budget are based on an increase in migration from what we have now. So in many ways, it’s Anti-Brexit in that sense.
“But you know he made the point about the great Brexit British pub, the great Brexit British pint and there was some regulatory divergence, so I’d say it was definitely a mixture of the two between anti-Brexit and Brexit.”