Laura Wright, Bloomberg Caroline, OBR discussed on Bloomberg Daybreak Europe


Households cuts to fuel duty and national insurance in his spring statement Global news 24 hours a day on air and at Bloomberg quicktake powered by more than 2700 journalists and analysts in more than 120 countries I'm Laura Wright this is Bloomberg Caroline Thank you so much Laura for our top stories Well let's continue then The discussion around the cost of living crisis really hitting home here in the UK the verdict on the Chancellor's spring statement As you mentioned he had to defend his package of tax cards saying that he's making sure I'm on people's side But sawing energy bills and inflation mean that Britain's are still facing the worst squeeze on living standards in at least 6 decades the OBR the independent budget watchdog says that households face a 2.2% decline in disposable incomes just in the coming fiscal year Joining me now is benzo anko senior research economist at the institute for fiscal studies Good morning Ben thanks for being with me What did the Chancellor do and what could he have done more The Chancellor took what is a largely improving situation for the public finances driven by higher inflation chose to bank some of it perhaps in the help of using it for pre election tax cuts and he chose to offset some of his existing package of tax rises with a smaller package of tax cuts mainly to try and burnish his reputation as a tax cutting Chancellor And what you chose not to do is to provide anything in the way of substantial support for lower income households of the pensioners If you're a pensioner who doesn't drive off so many relies on looking at its benefits during there was almost nothing in the way of support for those households and yesterday's statement So it was quite brave in the face of such a large squeeze of living standards as you just alluded to But the chance that seems to have one eye on perhaps later this year about because of the election very really wants to be able to cut taxes and in the meantime he's willing to households take a really substantial hit the living standards as part of that But I suppose he gave his explanation which is that the outlook is incredibly uncertain I mean you say that public finances are looking okay now but the issue is about whether they'll stay that way borrowing over the next fiscal year forecast at 99 billion pounds 16 billion higher than previously predicted debt interest costs hitting a record 83 billion pounds The point of those figures essentially Ben is that the public finances could get a lot worse We don't know Absolutely And the OBR highlighted just how uncertain things are at the moment Clearly this is a particularly precarious moment not just for the economy but for the global economy And we don't know how things are going to pan out particularly in terms of how long this surgeon energy prices will last how long inflation will take to get back to something more like what we've come to know as the new normal And what that means for the government So yes you could say that it's just being prudent and it's perhaps holding some of this money back in case you need to in case things do turn out worse I would say that that isn't the rhetoric he was giving He was particularly emphasizing the tax cuts and the fact that he wants to make more tax cuts that readers seem to be the direction he's going and I think that also it says a lot about his priorities He was willing to spend about half of the windfall he received He chose to spend that largely on things that benefit middle earners and particularly drivers Rather than those at the very bottom and most vulnerable those would be most effective and those are more struggle to weather the storm I think we could learn something about his priorities It's not just about such an uncertain environment There's also political choices that he made there He could for instance have chosen to increase benefits in line with a more recent measure of inflation so they're currently going to go up but they're not currently they're going to go by September measure of inflation just over 3% It could have said okay we'll take the January of February measure that would actually cost anything in the long term but he's chosen not to do so on households but we do have to think about businesses too He promised to cut taxes for business investment but not till the autumn So the reaction from the CBI the big business lobby of course Tony dankers say that it's not enough to tackle the current challenges facing firms I mean this is the other issue isn't it If we don't get firms to grow and high paying jobs for the UK then again that's going to be a hit to living standards So there's pressure to do more for businesses surely How much did he give There is definitely pressure to do more for businesses and the chunks of those indicators That's a key part of his economic vision in his economic agenda I mean we didn't see much of that Yes basically said you're here for me again in the autumn but you gave a lecture recently in which you talked about the importance of trying to boost business investment which has been historically quite in the UK So yesterday there wasn't much in the spot for businesses We may see something come around in the autumn and I'm sure business would like to see something sooner but there will have to wait And that's sort of a broader package here There's a broader pattern which is that it seems to have tried to be just enough to tie them over the next few months And it's going to come back in the afternoon with all the big substantial policy decisions I think he was hoping not to do anything at all this time around but his hand was really forced Okay There is another please walk Sparky for me No way I'll throw in a caramel frappe Oh Make it a large deal.

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