Events dear boy
Turmoil overseas complicates the UK's economic propsects
As the fall-out from the Greek referendum continues, George Osborne has sought to use the crisis to justify further spending cuts to be announced in today’s Budget. Speaking ahead of the announcement, Osbourne pointed to Greece to highlight the dangers of uncontrolled borrowing.
Today’s Budget, the first by a Conservative government since 1996, has been positioned as heralding a ‘lower welfare, lower tax’ era. On the tax side, Osborne is expected to outline tax cuts which will primarily benefit the middle class, including a rise in the starting point for the 40p tax rate and an increase in the personal tax allowance.
Osborne will also provide details on how the government will achieve its promised £12 billion cuts to welfare spending. The government’s plans in this area have proved contentious, particularly its aim to implement the cuts within the first two years of the new parliament. It is expected that the timeframe will be extended by a year.
While Osborne will today undoubtedly point to modest growth and relative economic stability in the UK to highlight Conservative successes, turmoil outside the country will likely prove far more significant. With Greece perilously close to exiting the EU and the Chinese stock market in free fall, events outwith government control may yet have a decisive say on the country’s long-term economic prospects.