The @CPSThinkTank policy team have done a full briefing on the Budget and what it means. The key takeaway? We're entering the age of the trillion-pound state. cps.org.uk/research/budge…
As this chart shows, the Treasury's original plan for spending to fall back to pre-pandemic levels is dead. Instead, Covid (like WW1/2) will result in a step-change not just in debt but spending - with a smaller economy to support it, and hence higher taxes.
By 2025/6, total departmental spending (admittedly in nominal rather than real terms) will be higher than during the pandemic - breaching the £1 trn barrier for the first time. And once you throw in capital spending, we're already there.
Much, much more in our full briefing - including where all this money is actually going to come from, and why the govt is pinning its hopes on some fairly heroic assumptions about productivity growth... cps.org.uk/research/budge…
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Quick thread shamelessly plagiarising/summarising the @OBR_UK's presentation just now (because v interesting). First, GDP forecasts better but still extremely painful.
This is the key slide for me, on which so much else rests - inflation spike expected to subside to a nice neat 2%. Business leaders I've spoken to are sceptical to say the least...
On tax, Sunak is clearly funding the extra spending from his tax rises - but keeping much of the cash back to cut borrowing/as a buffer against instability
In my column today I discuss a big problem with Whitehall's architecture, which is an increasing topic of concern - that there's no department which has business/innovation as its core focus thetimes.co.uk/article/tax-or…
The situation with BEIS is particularly egregious. @KwasiKwarteng is trying to change this, but this is literally all the stuff from its 2019-20 annual report under 'making the UK the best place to grow a business' (which is meant to be one of its core strategic aims).
Now obviously there's been a pandemic, and the energy side of the brief has become rather important. There's also a lot happening on improving regulation. But business/growth need the same kind of push from the top that levelling up or Net Zero get, throughout the Civil Service.
End of the superdeduction, rising corporation taxes and new health and care levy see us go from 22nd to 30th overall. In the bottom group for business taxes, personal taxes, property taxes. Our business rates regime already worse than everyone except Iceland.
NB This is not just about headline tax rates. This is based on @TaxFoundation's expert modelling of what kind of tax regime is easiest to navigate and best at producing growth. So pretty alarming stuff and should be a big big 🚩🚩🚩 for govt.
Much as I hate to disagree with @FraserNelson et al, I think young people not being able to afford their own homes is a teensy weensy bit more of a factor spectator.co.uk/article/baby-d…
See eg this US research which shows a pretty clear correlation between house prices and fertility rates zillow.com/research/birth…
People like to wait to have kids until they have a home of their own. If they can't get a home of their own, they delay becoming parents - sometimes permanently.
The latest job stats from the @ONS are extraordinary (and revealing re shortages). Employment now back above its pre-crisis peak - but still a record surge in vacancies too (above average in every single sector).
Obviously this is causing dislocation but it's worth repeating the fundamental point that if you'd told the people at the start of the pandemic that our big problem now would be too many empty jobs they'd have bitten your hand off - after they'd stopped laughing.