The news today is both good and bad for the private sector. Lets start with the good news. As expressed in a previous blog:
“Another ‘progressive’ measure that has been slammed is the corporation tax – considering that there are estimates that the large companies already a lot of the time only pay around 20% tax – the reduction will see large companies (such as banks) paying less on tax than many people who simply can’t afford the rates (and increased rates – e.g. VAT).”
This story has been developed by Citigroup. For one, they refer to how the bank levy will fail to fetch the 2bn proposed – estimating it will be around 1.3bn instead. Secondly, to make things worse, the corporation tax reduction (commented on above) will actually offset the loses and could see banks making an extra profit of £132m a year.
The bankers clearly got an easy ride. It was disgusting watching Clegg and Cameron trying to argue last night that the budget somehow punished the bankers. The markets and shares responded positively to the budget because they expected worse. Why would they expect any different seeing as though they were the reason the crisis occurred in the first place? Who would have thought that there was so much negative rhetoric around the banks by both parties before the budget. There were so many other measures that the government could have brought in to punish the banks. The most influential banking reform would have been the introduction of a Tobin Tax, which could have been used to fund vital pubic services and further undermine the ConDem’s ideological argument for the ‘necessity’ of spending cuts.
Now the bad news for the private sector is the FT’s report that there are concerns over whether the private sector will be able to create jobs in poorer regions where the public services and jobs have been cut with such vigor. So much for the private sector guiding the economy into growth. It looks like its going to take us back to exactly where we have just come from, whilst also widening the north south divide. This is just another clear reason for why the public sector is vital for our economy, and there is a heavy price for cutting it like the government are planning.
So yet again, there are even more negative reports and analyses of the budget. There are signs that the LibDem rebellion is entering un-reached territories, as Simon Hughes becomes involved. However, Clegg is still adamant that the budget is progressive, arguing that it is only regressive if you don’t consider the future policies that the government are going to bring in. Oh yeah, sorry. Forget about those extra cuts that are going to be brought in, how progressive.