What they are saying about George Osborne’s budget
Emergency budget 2010: The new Chancellor gives it to us straight – even if we don’t like it
In his emergency budget today, George Osborne laid out plans to cut the UK’s deficit with a raft of measures he told the Commons were “tough but fair”. The new budget sets out £40bn of public spending cuts and tax rises – in addition to £56bn of cuts already penciled in by the previous government.
Its headline measure is the rise in VAT from 17.5 per cent to 20 per cent from next January. Other measures include child benefit being frozen for three years, a two-year public sector pay freeze for those earning more than £21,000, and a 25 per cent cut in departmental budgets.
The Chancellor claimed he had no choice but to swing the axe, telling the Commons: "The years of debt and spending make this unavoidable." But what do politicians and economists make of his plans?
WHAT THEY ARE SAYING:
• Larry Elliott, economics editor of the Guardian: "This budget is a colossal gamble. There was little evidence before the election that Darling's fiscal plans themselves draconian were insufficient to keep the febrile financial markets sweet. The pound and gilts strengthened during the election campaign, even though the possibility of a hung parliament was ever-present... Far from being a terrible evil, government spending spared Britain from an even worse recession in 2008 and 2009, and Osborne's doctrinaire approach to deficit cutting risks not just slower growth and higher unemployment, but a fresh leg to the downturn."
• Harriet Harman, Labour’s acting leader (above right): "This is a budget based on rewritten history and false excuses. They say there is no alternative. But the truth is this is what they want. This budget isn't driven by economics. It's driven by ideology - their commitment to a smaller state. This austerity budget is their choice and right now it's exactly the wrong choice. The Lib Dem leaders have sacrificed everything they ever stood for to ride in ministerial cars and to ride on the coat-tails of the Tory government."
• David Hughes in the Daily Telegraph: "George Osborne will never again be in as strong a position as he was today and he didn’t waste it. Speaking with an authority and command he has rarely exhibited at the dispatch box, he rolled out a cleverly balanced budget statement with some aplomb. Today we had clarity. That will not lessen the financial pain that we are all about to share but at least Osborne has had the guts to give it to us straight. We know what’s coming."
• Stephanie Flanders, BBC economics editor: "The government [believes] that all the short-term pain - economic and political - will be worth the long-term gain, in Britain's credibility with the markets and possibly its long-term potential growth. So, presumably, does Mervyn King. But [shadow chancellor] Alistair Darling isn't the only one who worries about the economic consequences of tightening policy on this scale. We have all to hope that they are all wrong - and Mr Osborne is right."
• Richard Lambert, Director General of the CBI: "The Chancellor has achieved his twin objectives of setting out a credible plan for the public finances and producing a convincing growth strategy for the longer-term. Mr Osborne is close to achieving his 80:20 ratio of spending cuts to tax increases, which is so important to sustaining long-term growth. The Chancellor has sensibly taken measures to secure public support by offering extra help to cushion the impact on low-income families. This budget is the UK's first important step on the long journey back to economic health."
• Alastair Campbell, former Labour communications director (above left), on his blog: "However much I disagree with the content of his budget, Osborne at least has an agenda and is making sure he takes it forward, whatever the impediments seated around him… What you saw today was a right-wing Tory Chancellor setting out, with considerable confidence, a major package of measures that fit with his right-wing Tory view of the world."
• David Frost, director-general of the British Chambers of Commerce: "We believe that the Government's decisive moves to cut the deficit will have positive effects on business and investor confidence. Even more importantly, the Chancellor's message that Britain is 'open for business' will be welcomed by companies the length and breadth of the country - and across the globe."
• Stephen Robertson, director-general of the British Retail Consortium: "If this really was a budget for jobs and growth the Chancellor would have scrapped next April's NI increase. Retailers' ability to maintain and create jobs will be undermined by this extra cost. The one per cent increase in National Insurance will cost retailers an extra £220 million. This equates to almost 15,000 employees on an average retail wage."