Budget 2014

2014’s budget for me was all about installing confidence. The Chancellor introduced a number of initiatives designed to not only demonstrate that Britain is currently in a strong period of growth but to try move away from the current narrative of "tough economic times we are in". It was an interesting budget which really focussed on middle-class working families.

A penny off a pint always goes down well. Freezing of fuel duty is also a good move, especially at the pumps but also the knock on effect through goods. A sexy £2000 childcare tax break will be well received by hard working Mums and Dad out there. Up to a limit of £10,000, for every 80p you put in, the Government will add in 20p. Simply put, if your childcare adds up to £10,000, you’ll pay £8000; the Government will pay £2000.

There is a lot of work still to be done. Nurses in particular have recently come under the spotlight as one example. However the increase in the personal tax allowance to £10,500 should be a great help. It’s interesting the amount of people that don’t either know or remember that from April this year it will rise from £9,440 to £10,000. Next month’s rise alone should see us having £40 in our back pocket. This is important as it helps install confidence, either by having some extra money available to pay the bills, save or spend back into the economy. Many will point to taxes being raised in other areas and the government “taking with one hand and giving with another”. Well of course he is. He wants you to spend. More money on products with VAT equals even more money to burn off the deficit.

For me. looking at it behaviourally, I think it works. You make the decision on whether you spend it or not. Increased numbers in the pay packet will be noted far more than increases on goods. Look around your office at the end of the month; note the amount of people who open their payslip to check the amount. This time next year, you will have £80 in your back pocket than you have right now. That will make a difference.

Growing Confidence: but is it Shared By Everyone?

Listening to 5 Live yesterday morning, there is still scepticism over whether the UK growth can be maintained. The 1.8% growth last year raised eyebrows and was three times the size of the original forecast by Office for Budget Responsibility. In November it raised it to 2.4% and today it has gone up again 2.7% (some are say more than 3%). Some sceptics are concerned that the Chancellor’s austerity measures could be contributing to this growth, rather than it being organic.

One for the Swingers

Osbourne’s attempts to win back older voters who swung away at the last election is interesting. While the main reason for introducing a new pound coin is down to the 45 million forgeries out there currently, the new twelve sided pound coin, which looks like an old threepenny bit, touches on nostalgia. A cut on Bingo tax is another.

Reforms to pensions, such as being allowed to out lump sums over the age of 55 and not be heavily taxed, alongside the ISA limited raised to £15,000 are nice wins and largest reforms we had for years. It is an interesting move and could change consumer behaviour to how these products are viewed. If the affluent, downsizing, empty nester, silver surfers weren’t already a prime target for many brands, they sure will be now with easy access to large volumes of money to spend.

It all adds up to an underlying conservative narrative to encourage families to be married (there was talk in the last budget of a tax break for married couples, which seems to have gone quiet), work hard and save for a brighter future. You can almost see and smell those sunny, oak tree lined suburbs.

Whether it works we’ll wait and see.