TheBudget

July2010

The purpose of this paper is tosummarise the 2010 budget with particular reference to its implications forlocal government and housing.

In July 2010, the coalitiongovernment revealed an Emergency Budget that has been described by EdmundConway, the Telegraph’s Economics Editor as “exceptionally rich in measures,policies, changes in tone, figures and analysis”.

The new Chancellor has been put inthe precarious position of balancing the need to cut the country’s budgetdeficit without threatening the fragile economic recovery. Financial marketswere expecting the 2010 ‘emergency’ budget to lay out a credible and decisiveplan for bringing the deficit down to sustainable levels.

This was without doubt one of themost brutal budget announcements in United Kingdom history and the coalitiongovernment considers that failure is not an option. The coalition governmentand the Chancellor George Osborne know that investors will punish the pound anddrive interest rates up across the economy if the budget isn’t credible or ifit seems unlikely to work. The new government is facing a deficit the size of which has never beenseen 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 becausethe previous Labour Government took a decision to continue to spend in aneffort 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 isaiming for of £113billion of fiscal tightening amounts to the biggest squeezethe United Kingdom has ever seen and ever had to endure since comparablerecords began post war in 1948. Perhaps the great depression of the 1930s maybe the best comparison for the issues facing the United Kingdom today.

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