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Shock cut in bingo duty

A reduction in bingo duty from 25% to 20% was the centrepiece of yesterday’s Pre Election Manifesto – sorry, Pre Budget Report – presented by chancellor, Alistair Darling.

 

Whilst it’s true that the chancellor had all the room to manoeuvre of a man holding a wake in a telephone box, he actually played safe by doing ….well…..doing virtually nothing. His rationale went something like this. The current government has done really well in holding everything together during the worse recession since the 1930s. If it hadn’t been for the rescue of the banks, the huge fiscal stimulus and the quantitative easing, the UK would now be twinned with Iceland.

 

He announced a slight increase in his estimate of UK borrowing costs this year, which will now reach £178bn compared to the earlier Budget forecast of £175bn. However, next year borrowing will be £176bn. You see the difference? No, okay then let me explain. In actual fact the government is not going to take any tough decisions on lending cuts for another year. The reason for this is that cutting back on expenditure now will undermine the recovery and perhaps lead to a “double dip” recession.

 

This has absolutely nothing to do with the fact that there is a general election due early next year and the fact that government ministers do not wish to add to the rising unemployment levels by losing their jobs. Well, it makes sense doesn’t it? This means that all the tough decisions on spending cuts will have to be deferred until after the election. And the chancellor did not give us even the tiniest clue as to how these reductions would be achieved. However, borrowing will be cut to £82bn by 2014-15.

 

There is to be a cap of one per cent on public sector pay for two years from 2011 (not next year of course) and there will be an increase in national insurance contributions of 0.5% from 2011 which is on top of the 0.5% which was announced in April’s Budget. This did not go down well with struggling small businesses although the proposed one per cent increase in corporation tax has been put off for twelve months.

 

The government has also identified a few billion pounds in efficiency savings but it seems that they will actually be spending these.

 

In fact, I am going to make my own efficiency savings, so if you want to see the minutiae of the Pre Budget Report with all the forecasts for debt, borrowing and expenditure you can see them on the Treasury’s microsite by clicking here.

 

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Posted in Fiscal stimulus, government borrowing, government spending, Public Finances

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