Depressed expectations help government
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The government has managed Budget expectations perfectly, almost to the point that a 10% leap in Capital Gains Tax is being met with a sigh of relief.
By floating rumours of CGT at 40% or even 50%, the government got investor and housing sector anger out of the way weeks ago.
And while the actual impact of the rise on landlords and property investors is yet to be seen confidence hasn’t wavered as, if anything, a higher rise was expected.
But the devil is in the detail with the threshold for CGT lowered to £2,500 and no tapered relief because it was too complex to introduce, says Osborne.
And the introduction of a bank levy will worry many in the mortgage industry.
If the tax, set to raise £2bn, creates any constraints on the banks already troubled lending capacity it will spell bad news.
Banker bashing may be politically popular and an easy way to raise cash but it must not punish those who rely on their lending facilities.
And, despite the risk of introducing a permanent levy unilaterally, it is still less than the US proposition, which could have raise up to £5bn here.
The deficit reduction plan was tough but considering the sight of sombre ministers and the stark warnings we have seen and heard all week it wasn’t surprising.
George Osborne repeatedly calling the Budget ’unavoidable’ and warning of the ’road to ruin’ without it, helped depress expectations, and deflect blame, even further.
All in all the whole Budget was built up as the most painful ever, and it wasn’t pretty, but the government did a good job at preparing industry of the cuts and tax rises it made and, naturally, at shifting the blame to the last government.
