Today is George Osbourne’s annual day in the spotlight. It’s Budget day. And with the UK and global economic outlook getting gloomier by the month, it’s going to a tough one. His tool box of tricks is running low.
What we already know
This has been written before the Chancellor’s statement, so if you’re reading this after lunch, some of this may be out of date, so, just saying!
It has been observed that the list of things for Osbourne to cut has run low. After he first took on the job of Chancellor in 2010, he had a buffet to choose from. Public sector services. Council budgets. The military. The disabled. The welfare state. The list goes on. He cannot continue to keep cutting at the services that are already buckling under austerity.
Some of the better news has already been “leaked” prior to Wednesday’s budget. Schemes like Help To Save (which I think sounds a bit patronising) and more Northern Powerhouse plans have been thrown out there. But these are things which are very long term plans, with plans for northern infrastructure projects still only that, plans.
We also know that the UK economy isn’t in the health as George Osbourne had hoped. Quarter after quarter projected growth is revised down. Yet, he’s committed himself to having a budget surplus by 2020 and public borrowing down, way down. The only way he can now do this is to cut further, and raise taxes.
Possible areas to raise tax
If George Osbourne does go down the road of a combination of tax rises and spending cuts, this will go down with the public about as well as a lead balloon. It will also hurt his leadership chances. But that’s a year or two away yet.
Fuel duty could be one area he looks at. Petrol and diesel prices have been low for a while now, which has been very welcome by those filling up. He may choose to raise fuel duty seen as though prices have come down. I suspect at the very least a 1p rise, but wouldn’t be surprised if it was 2p. Expect fury from the public and motorist groups.
VAT. Although unlikely, this could be another area Osbourne looks to to raise revenues. A 1% rise to 21% would bring in around £500m extra per year for the Government. This would be highly unpopular though and is likely to be way down on the list of available options.
All in all, he’s £4bn a year short of his targets. It has to come from somewhere.
Why budgets matter to the window and door industry
As drab and droll as these things seem, budgets matter, greatly. They affect every single one of us and they affect what we have to spend, or not spend in recent years.
For those of us selling windows and doors to the general public, we need budgets to be positive affairs. They can alter the mood of spenders. And when it comes to big ticket items, like windows and doors, any little swing can have a tangible effect.
Unfortunately, due to reasons that Osbourne will tell you are out of his control, things are not looking rosey. This is going to be one of his most austere budgets in a while. It’s going to be heavily cuts focused, not that Government spin will admit that. As an industry we’re going to have to continue to work hard to appeal to home owners to invest their cash in our products.
And with the EU Referendum pending, and a European Football Championship, there are a few reasons for people to look away from home improvement in the coming months.