This was one of the most significant UK budgets in recent years – although it has very limited ‘Scottish specific’ implications.
What a difference a decade makes. Less than 10 years ago (in June 2010) George Osborne set out plans for a major fiscal consolidation which aimed to reduce public spending below 40% of GDP by 2015/16. The plans involved reducing the fiscal deficit to 1 per cent of GDP by 2015, as part of plans to prevent the debt to GDP ratio exceeding what was framed as an unsustainable level of 70%.
Today Rishi Sunak commended his expansionary budget which will see the deficit rise to 2.4% of GDP this year whilst the government now seems quite relaxed about a debt-to-GDP ratio stabilising closer to 80% than 70%. And these forecasts were largely made before major concerns about the impact of coronavirus materialised.Continue reading
The Budget has – quite rightly – been overshadowed by the ongoing coronavirus emergency.
At times like this, the normal budget day issues that tend to interest us economists, from Barnett consequentials through to the latest policy initiative or forecasts from the OBR, are very much secondary.
The channels through which the spread of coronavirus can feed through to the economy are complex and wide ranging.
But the Chancellor did caution that we should expect for a ‘significant impact’ on the economy.
Impacts will vary by firm, sector, market-place and supply-chain. The ability of each business to flex their activity over time to cope with disruption will be crucial.
Since February’s Budget, there has been discussion about income tax in Scotland and public spending.
Oddly, the debate was sparked by adverts – rather good ones we might add! – on the Tube promoting Scotland as a place to live.
Some – such as London MP Greg Hands – have responded by arguing that moving to Scotland would mean paying higher taxes.
This has been countered by others who argue that whilst (some) taxes may be higher, the quid-pro-quo for paying more tax is higher public spending and benefits such as free University tuition, more generous childcare, free personal care, free prescriptions etc.
Earlier today, FAI Director Graeme Roy gave a talk to the Chartered Institute of Taxation and Association of Taxation Technicians Joint Presidents’ Lunch at The Signet Library, in Edinburgh.
The text of his talk is below, and you can download it here.
The Scottish Government says that income tax policy changes since 2016/17 have been ‘highly redistributive’ and have ‘protected low income earners’. But how much of this affect can be attributed to the Scottish Government’s rates and band changes, and how much to the UK Government’s Personal Allowance changes? And how does the story about the distributional impact of recent policy decisions change if we incorporate other taxes (council tax) or social security spending?Continue reading
