PRIOR to last Wednesday’s announcement, George Osborne said he wanted to produce a Budget for growth.
With a gaping hole in public finances, it was always clear that any growth could not be funded through Government largesse. It will be up to the private sector to generate wealth and offset public sector job losses.
Unless we see a further substantial devaluation of sterling we are not going to get a German style surge in manufacturing any time soon.
So all parts of the private sector will have to grow, including our financial services industry – internationally owned and with a big base in London.
London has huge strengths as an international city but we must never take this for granted. If global firms are to stay here then we must ensure their staff are happy to be in the UK. If the talent moves so will the firms.
There is no doubt that recent events have caused international investors to question if Britain is as welcoming a business environment as it once was.
This week however the Chancellor promised us something different; a Budget to attract investment to the UK and to demonstrate that we are once again open for business.
And there was much to commend it, both in terms of tone and content.
A cut in corporation tax; relief for non-doms investing in the UK; the establishment of 21 enterprise zones and increased support for SMEs, not to mention an explicit acknowledgement of the importance of a world-class financial services industry, will all produce economic benefits and provide reassurance for firms and their staff that want to be based here.
Perhaps even more importantly, the chancellor acknowledged that the 50p tax is a seen as a temporary measure and, following calls from Labour for it to be revisited, we heard no further reference to the bonus tax.
These measures represented policy-making at its lowest ebb – they went against the most basic tenets that ought to underpin a fair and predictable tax regime and proved damaging to our reputation in the international business community.
It will be a long haul to repair that damage but I believe this government is heading in the right direction. Even with spending cuts, balancing the books will be difficult and patience and understanding is needed.
This of course should not be extended to those who continue to vilify the industry and appear intent on either shrinking its size or who refuse to take into account that we live in a very competitive world, hungry for the talent we are lucky to have on our doorstep.
Stuart Fraser is policy chairman of the City of London.