Better Capital chairman Jon Moulton and others react
After announcing the autumn statement chancellor George Osborne faced 96 backbench questions in 97 minutes.
His grilling in the House of Commons might have come to an end but his plans got serious question marks.
While plans like a £1bn youth contracts and credit easing were lauded, his infrastructure projects were regarded as “publicity stunts to safeguard a seat in the next election.”
So will his plans kickstart the economy? We asked politicos and business honchos to give their verdict.
Sam Bowman, head of research, Adam Smith Institute told LondonlovesBusiness.com: “With his Gordon Brown-like plans, he’s [Osborne] just sowing the seeds of another recession.”
“I don’t understand why Osborne presented a pseudo-budget in the name of an autumn statement. With his Gordon Brown-like plans, he’s just sowing the seeds of another recession.
“What’s even more appalling is the obsession with credit easing, the small print of which will again leave small businesses high and dry.
“The other debacle is creating an unemployment cobweb by wasting money on skills that might be useful for a particular youth contract and be of no use once the contract ends.
“And of course the surprise element was deferring a 3p rise in fuel duty which was a publicity stunt to grab headlines and safeguard a seat in the next elections.”
Jon Moulton, chairman of private equity firm Better Capital told LondonlovesBusiness.com: “The big plans of the statement would be obsolete even before they’re implemented”
“Osborne’s plans are just all talk no action. The big plans of the statement would be obsolete even before they’re implemented for the simple reason that by the time they try putting money on the table, the economy would’ve have become worse.
“Osborne’s projects will in no way turn the economy around, his plans will not only invite more debt on the economy but also pose a threat to sectors that are doing well.”
Sunny Hundal, editor of the left-wing blog Liberal Conspiracy told LondonlovesBusiness.com: “Osborne’s last one made the economy worse – by depressing consumer confidence and demand – and now he’s pretending that his formula will still work.”
“I can’t think of any positive news that people can take from today’s budget. Osborne’s last one made the economy worse – by depressing consumer confidence and demand – and now he’s pretending that his formula will still work.
“At the very least, he is doing what we on the left have been advocating for years – boosting the economy through infrastructure investment. But look on the other side: job cuts will be much higher; the national debt will be higher; public borrowing will be higher; medium term growth will be lower. What exactly of his last budget actually worked? The whole charade has been spun so much that even his most ardent defenders on the right were cynical today.”
Stephen Canning, chairman of Braintree Conservative Future, told LondonlovesBusiness.com: “Not the most exciting budgets but my favourite announcement is the £1bn youth contract.”
“Although not the most exciting of budgets it shows the true bravery and commitment of our Chancellor and government to eliminating the United Kingdom’s deficit, maintaining our AAA credit rating and preparing us for a future of growth. He has implemented more measures to bring public pay into line with the rest of the nation and the austere times we are entering: however although wages will be capped at 1 per cent, potentially a real-terms pay cut, Bank of England inflation targets will mean these cuts aren’t as high as you might initially think.
“There was some fantastic news as the planned 3p fuel duty rise in January will be scrapped and also good news for those on benefits as payments are increased by 5.2 per cent next year, in line with inflation.
“One of my favourite announcements is the £1bn “youth contract” to subsidise six-month work placements for 410,000 young people; a fantastic move that will see the government building a workforce for the future and preventing a generation entering the unemployment trap. Overall the chancellor summed it up by saying that “people know that quick fixes are like the promises of a quack doctor offering a miracle cure” which is true, people will look at this, admittedly austere announcement, and realise it is what is necessary to protect the country from going the way of Europe.”
Sir Michael Snyder, chairman of Kingston Smith, told LondonlovesBusiness.com: “Osborne should look at cutting red tape and axing lengthy health and safety regulations in order to help the economy grow rapidly.”
“I think the autumn statement is a positive step to resuscitate the economy. From tackling unemployment, helping small businesses to boosting infrastructure, I think the government is running pillar to post to boost economic growth.
“Having said that, Osborne should look at cutting red tape and axing lengthy health and safety regulations in order to help the economy grow rapidly without the fear of a double-dip recession looming large.
Nick Davis, head of corporate at Mishcon de Reya told LondonlovesBusiness.com: “Good news as Osborne acknowledged the fact that Project Merlin isn’t working.”
“I think the autumn statement brought good news for the business because Osborne acknowledged the fact that Project Merlin wasn’t working and have now made amends to boost business.
“We’ve got to get the banks to start lending in order to kickstart the economy and if the details of lending to businesses are free of bureaucracy and red tape, then the statement is a winner.”
Andrew Smith, chief economist, at KPMG in the UK, said:“The economy and the budget deficit are clearly interlinked, but has the chancellor got the relationship right?”
“The chancellor blamed international developments for undermining the recovery and the deficit reduction plan, but that is hardly the whole story. UK output has been broadly flat since as long ago as last autumn and the shortfall from March’s forecast for growth this year is largely accounted for by undershooting consumption, not export weakness.
“Even after the significant downgrading of the OBR [Office of Budget Responsibility] forecast, the risks to the growth outlook remain heavily on the downside. The squeeze on real incomes may ease somewhat if inflation falls sharply next year, but rising unemployment is providing a reason for households to save rather than spend; export markets are weak, also reducing the incentive to invest; and confidence generally is unlikely to recover as long as the sword of Damocles hangs over Europe.
“The economy and the budget deficit are clearly interlinked, but has the Chancellor got the relationship right? Osborne is betting that austerity will restore the government finances and spontaneously rekindle growth, but the risk is that a contractionary fiscal stance at a time when other areas of demand are weak will tip the economy into a vicious downward spiral.
John Cridland, director general of CBI, said: “The downgraded forecasts and outlook were no surprise, but the Eurozone crisis is still hanging over us.”
“This autumn statement works with the realities of today and provides an imaginative framework for UK businesses as it strives to secure growth and jobs. This is “Plan A plu
s” in all but name.
“The downgraded forecasts and outlook were no surprise, but the Eurozone crisis is still hanging over us. The Government’s dogged commitment to budget deficit reduction remains the only way to maintain the UK’s triple A credit rating and low interest rates on international money markets.
“We particularly welcome the new emphasis on capital spending, and the measures to leverage private sector investment on infrastructure for roads and energy.
“Equally important for jobs and growth is the recognition that the UK’s energy-intensive users need help as a result of the unilateral increases in manufacturing energy costs from the carbon floor price and electricity market reform.”
“The Youth Contract is excellent news for young people across the country. The Government has developed our idea to incentivise businesses to take on the young unemployed. This will encourage firms to take a chance on inexperienced young people and help tackle the scourge of youth unemployment.”
Stephen Robertson, director general of the British Retail Consortium, said: “Downgraded forecasts make it all the more vital that the Chancellor implements a credible plan for stimulating economic growth.”
“Downgraded forecasts make it all the more vital that the chancellor implements a credible plan for stimulating economic growth which helps retail in keeping inflation down and generating jobs, especially for young people.
“The chancellor has addressed a number of the concerns we raised with him. His measures should provide some help to the hardest-hit families and may go some way to reversing the trend of falling consumer spending, but the challenge for the next twelve months will be to rebuild consumer confidence and stimulate private sector investment.
“A number of these proposals have the potential to help households and businesses but may not go far enough, particularly if the eurozone crisis deepens.
“Despite the option to postpone part of next year’s rise, businesses are still faced with the prospect of big increases in rates costs. The option to postpone 60 per cent of April’s increase will be a modest help but the bills will still have to be paid in the end.”