|The Budget- (18.04.02)|
Econo-my.com's predictions for Gordon Brown's budget were not that close. We expected more indirect taxation such as beer and petrol (but not VAT) and were suprised that NI went up for both consumers and businesses in this budget.
However we were more accurate in not expecting too many dramatic announcements that would have an immediate impact. The state of the economy called for a very gentle and balanced approach which allows a small government spending defecit to occur and that's exactly what we got. The total amount that the budget raises, around £8 billion or £9 billion pounds per annum is mostly from 2003 onwards, when if the predicted economic growth occurrs we may see some of this given back again as tax receipts are likely to remain ahead of forecast.
The implications of National Insurance are that there should be a small rise in unemployment. However as the NHS is labour intensive extra spending on health will probably compensate for this in total. Wage pressures are currently on the decline and this budget will reinforce that over the next two years. And for the effects this budget will have on the macroeconomy - that's about it.