This is expected to be an uneventful Budget as the measures to address the public finances have already been taken. The challenge is to come up with measures which will be effective in achieving higher Private Sector growth.
I would like to see a larger downsizing of the Public Sector, matched by reductions in taxation, which would have the best chance of increasing growth. As part of this our welfare system needs a radical overhaul, reducing abuse and the subsidising of employment. We need an economy where there is the clear message of greater financial reward for people to increase their skills.
We know that UK growth in the near future cannot come from unaffordable, debt financed increases in consumption; but needs to come from increased exports – of services as well as goods; increased capital investment and more successful SMEs.
At a micro level I hope to see bigger financial incentives for equity investment in small companies, where the most effective measure would be a major increase in the income tax allowance for EIS investment. Particularly for capital intensive businesses, there is also the need for faster, tax deductible investment write-downs. More generally it is crucial to make Britain, again, a tax competitive and attractive location for inward investment.