Any Budget with £40billion of tax rises, hitting almost every citizen, is never going to win hearts and minds.
The difficulty with Rachel Reeves’ first effort at the dispatch box is that it has pleased no one, including those who monitor the UK’s fiscal affairs.
Even the sainted Office for Budget Responsibility (OBR), which the Chancellor has sought to keep onside, had doubts.
Open door: Even though the Treasury is naturally is conservative in its fiscal thinking, the leftist leaning content of the Budget was not going to get much push back
The downgraded growth forecasts beyond 2025, the higher inflation projections, the discussion in the OBR report of ‘fiscal illusions’ and the difficulty in keeping tabs on the recast debt rules, all point to vulnerabilities in the Reeves approach.
When Gordon Brown inherited the Treasury in 1997, he didn’t think it fit for Labour’s purpose. Among early casualties was the permanent secretary Terry Burns, regarded as too free market in his views.
No such radical changes proved necessary for Reeves. She appears to have been pushing on an open door.
Even though the Treasury naturally is conservative in its fiscal thinking, the leftist leaning content of the Budget was not going to get much push back.
An expansion of the state paid for by higher national insurance charges and ‘spiteful’ punishment of small farmers and enterprises, non-domiciled taxpayers,
North Sea oil drillers and assorted other wealthy taxpayers went through on the nod.
The lack of a growth agenda – hopefully it hasn’t been crowded out – is a troubling lacuna. The statist approach must have been a relief to officials after 14 years of Tory rule.
Permanent secretary James Bowler, who worked with Brown and the late Alistair Darling, is experienced and knowledgeable.
He is seen as less likely to offer challenge to ministers than predecessors Tom Scholar or Nick Macpherson.
The Treasury complied with the quick and dirty audit demanded by Reeves, coming up with the confected £22billion black hole.
It allowed careless speculation to run riot, leading ordinary tax-paying citizens to cash in pension lump sums and make other unnecessary personal decisions.
Borrowing headroom was created by weakening the foundations with the adoption of the Public Sector Net Financial Liabilities (PSNL) measure of debt to national output. None of this did the Government favours.
The scepticism at the Institute for Fiscal Studies, questions raised by credit rating agencies S&P and Moody’s and setbacks to consumer and business confidence are all unintended consequences.
Sage advice has been lacking.
Trench warfare
Given the trajectory of Burberry’s share price this year, down 39 per cent before yesterday, it only required bid speculation to send the stock soaring.
Even the sainted Office for Budget Responsibility (OBR), which the Chancellor has sought to keep onside, had doubts.
The thought of the venerable British luxury brand being swallowed by nouveau riche, padded jacket maker Moncler fills one with horror. Moncler makes no secret of its ambition ‘to consolidate the new luxury segment’.
The increasing power behind the throne at Moncler is luxury superpower LVMH, which taken a seat on the board.
Burberry chairman Gerry Murphy needs to be careful what he wishes for. Net-a-Porter, the last UK luxury brand to be swallowed by big beast Richemont, failed under new ownership and was sold for a song.
Burberry is warned.
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