The purpose of this paper is to summarise the 2010 budget with particular reference to its implications for local government and housing.
In July 2010, the coalition government revealed an Emergency Budget that has been described by Edmund Conway, the Telegraph’s Economics Editor as “exceptionally rich in measures, policies, changes in tone, figures and analysis”.
The new Chancellor has been put in the precarious position of balancing the need to cut the country’s budget deficit without threatening the fragile economic recovery. Financial markets were expecting the 2010 ‘emergency’ budget to lay out a credible and decisive plan for bringing the deficit down to sustainable levels.
This was without doubt one of the most brutal budget announcements in United Kingdom history and the coalition government considers that failure is not an option. The coalition government and the Chancellor George Osborne know that investors will punish the pound and drive interest rates up across the economy if the budget isn’t credible or if it seems unlikely to work. The new government is facing a deficit the size of which has never been seen before, partly as a result of the financial crisis that led government to ‘bailout’ the banks and led to a reduction in government revenues and partly because the previous Labour Government took a decision to continue to spend in an effort to avoid a severe recession.
The previous Labour government hadcommitted to spending cuts and tax increases of a combined and expected £73billion by 2014/15. The coalition government is now planning to cut afurther £40billion on top of this.
The figure that the treasury is aiming for of £113billion of fiscal tightening amounts to the biggest squeeze the United Kingdom has ever seen and ever had to endure since comparable records began post war in 1948. Perhaps the great depression of the 1930s may be the best comparison for the issues facing the United Kingdom today.
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