£100 Billion of Misdirection? How the UK’s Budget Is Trying to Pull a Bunny out of the Hat
In the next budget, the Chancellor will try something close to wizardry: promising a tax ‘decrease’ that feels like a magic trick to the public and the press. What follows is a closer look at how that illusion might have more trick than treasure.
What the 2024 Budget Is Aiming To Do (And Why It Probably Won’t Work)
- Short‑term pop‑corn tax – a 1‑pence cut in income tax or a bump in the Inheritance Tax threshold. Good for headlines, but it won’t fix the underlying fiscal drag keeping UK middle‑income households at a record high tax rate for decades.
- Corporate optimism – reduce the corporation tax by 5%. That’s a real promise for business, but it’s still a modest step compared to the impossibly high tax burden that keeps the economy sluggish.
- Capital allowances the size of a superhero – bring back super‑deductible capital allowances and pack them to a level that could seriously boost investment.
Why England’s Economy Is Still “On Life Support”
Since 2010, the UK only enjoyed “average” growth. If the post‑COVID economy had kept that pace, we’d be about 10% bigger today. Instead, we’re tethered to production that’s stalled, like a car on a flat cushion. The result? Lower living standards, stalled tax revenues, and the inability to keep the public‑services budget afloat.
What’s Sticking the Chancellor Between a Rock and a Hard Place?
- High tax rates that keep everyone paying more than they should.
- The temptation to perform a quick “price‑drop” sweep to win the next election.
- The knowledge that real, long‑term turnaround demands big cuts – not just in cutting taxes, but in cutting spending.
Time to Trade Illusion for Substance
We’ve got a clear, simple playbook: ignore the seat‑of‑the‑pants short‑cuts and launch a 10‑year growth plan. The plan should include:
- Bulk cuts in corporation tax (at least 5%) to unlock fresh UK and foreign investment.
- Super‑deductible capital allowances that draw a crowd and pay for themselves through increased infrastructure spending.
- Strict spending controls – weaker support for current consortia that drain taxpayer dollars.
- A reliable projected timeline that links economic improvement to tax revenue growth, thus proving it’s wise to reinvest in vital public services.
Bottom line: The next budget in March should be less about flipping a coin for votes and more about flipping the whole economic coin.\u200b
