So many more erudite people will write reams on the Pre-Budget Report.  So there is little intellectual capacity that I can offer to this august annual bun fight! In passing it is such a pity that the House of Commons is such a bear pit these days.  The behaviour and contempt on both sides of the House leaves a great deal to be desired.


I thought the only valid point that Ed Balls made was that living standards had dropped and there was scant evidence that much was being done about it.  I am not sure until the Government has finished with its good house-keeping goals and that is not around the corner that there is much that can be done! In passing I have not heard a politician speaking in the House sound like a demented screech owl since George Brown, then Deputy PM, did in 1964! What I find dispiriting about Ed Balls is that he lacks humility and cannot spell ‘mea culpa’ – extraordinary for such an intellect!

The growth targets and borrowing and debt targets were ambitious – 2013 from 0.8% to 1.4%, 2014 from 1.8% to 2.4%, 2012 2.2%, 2016 2.6%, 2017 2.7%, 2018 2.7%. If those growth forecasts are accurate, higher interest rates are inevitable.

As for the borrowing requirement – 2008 £158 billion, 2012 £111 billion, 2014 £96 billion est, 2015, £96 billion est, 2016 £79 billion Est, 2017 £21 billion Est, 2018 £23 billion – 2019 small surplus – interesting. The OBR forecasts that in 2015/6 debt will be at its peak – 80% of GDP.

What do I like about the autumn statement –

1)      Cap welfare spending – save £19 billion

2)      To save £7 billion in next 2 years from Whitehall departments protecting NHS and education.

3)      £900 million reduction in military spending post Afghanistan

4)      £100 million LIBOR fines to go to military and ambulance & fire service charities.

5)      Osborne confirmed that the rich were paying the most in taxation. 30% of income tax is paid by 1% of the population.

6)      Clamping down on tax evasion and avoidance will save £9 billion over 3years.

7)      Bank levy increased to 0.0156% reaping £2.7 billion in 2014 and £2.9 billion in 2015

8)      Infrastructure capital spending to increase on roads railways (HS2) plus expenditure on shale gas and onshore wind energy as against off shore.

9)      Increase house building

10)  Virgin Money to join funding for lending.

11)  Schools to get free meals.  It annoyed me that it was the Lib-Dems’ idea which Michael Gove initially rejected.  I hate the idea of Lib-Dems having political credibility.

12)  Enterprise allowance for 50,000 extra people.

13)  30,000 extra student places.

14)  Tax relief for film makers

15)  Business rates capped at 2% – it should have been more.

16)  Recuperation for empty shop premises valued at £50k + – £1000 off rates to encourage local activity.

17)  NIS for those under-21 years of age exempted.

18)  Fuel duty increase for next year cancelled

19)  CGT for non-residents on property sales to be charged.


Dislikes –

1)      £50 saving for each family from a cap on energy prices until 2015 – rubbish, irrelevant and political posturing!

2)      Not enough done to close the gap between the wealthy in the South and the impoverished in a large number of places in the north.

Many of the points in the budget were a little timid, but Chancellor Osborne has two more bights at the cherry; so needs to keep his powder dry.


WARNING – Though I thought George Osborne’s presentation was balanced there is a HUGE LEAP OF FAITH TAKEN THAT GROWTH WILL PICK UP IN EUROPE, US & ASIA.  I HAVE EXTREME DOUBTS ABOUT EUROPE.  In fact I just DON’T BELIEVE IT! Spain and France worry the living daylights out of me!


These are David Buik’s personal views

Twitter – @truemagic68

David Buik

Market Commentator

+44 (0)20 7886 2775

Panmure Gordon & Co

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