Peter Hoskin

Budget 2008: Sending out a message

Text settings

As Dr Oliver Hartwich outlined on Coffee House yesterday, The Treasury doesn't have much room for manoeuvre ahead of Wednesday's Budget.  In short: it's down to our economy being taxed, spent and borrowed up to the hilt.  Even shorter: it's down to Gordon Brown's decade as Chancellor.

What, then, can Alistair Darling use the Budget for?  He'd have found some inspiration at the pre-Budget event organised by the British Bankers' Association (BBA) and the think-tank Reform this morning.  As the chief executive of the BBA, Angela Knight, put it: this Budget shouldn't be about tweaking, twitching or changing - there's no space for that.  Instead, it should be about "sending out a message".  A message which tells the financial services sector that Britain's still a great place to do business.  This can be done by either pro-business rhetoric ("attitude," as Knight called it) or by announcing, say, a review into Britain's unfriendly corporate tax regime.

Rhetoric and reviews - isn't that mere posturing?  Maybe.  But in this case, it's to our benefit.  After all, financial service companies directly contribute about £12 billion to the Government coffers via tax, and their employees add another £15 billion.  The Government's already made spending commmitments that reach far into the future.  It needs all the money it can lay its hands on.  If big business migrates elsewhere, other people will have to make up the fiscal shortfall.  And who would those other people be?  The general, tax-paying public...