The Budget

(By Richard Holway 9.00pm 22nd Apr 09) You may remember that I had a stand up argument with Brad Holmes of Forrester in Feb 2008 when he forecast IT would return to double-digit growth in 2009 and 2010. (see IT forecasts – Holway’s Rant) Well, I felt exactly the same anger when I heard Alistair Darling declare that growth would return to the UK economy in the last quarter of 2009 and would amazingly grow at 3.5% in 2011 and beyond. This from a man who also got every forecast he has made as Chancellor totally wrong.

This is a forecast as dangerous for the economy as the Forrester forecast might have been for IT companies. If you believe either you would make the wrong decisions – or more precisely, you won't make the hard ‘survival-type’ decisions at all.

At least this time I’m not alone. My new best friend Vince Cable (see my post yesterday – Vince Cable and a positive lunch) has just appeared on Channel 4 News saying that he thought this amazing return to boom-level growth was a fiction too.

Then we get on to the ‘soak the rich’ tax increases. I really thought that these tactics were a thing of the past. From next April, those earning over £150K will pay 50% tax, which with employers and employees NI will take the rate to over 60%. Many earning over £150K will have the ability to shift income to capital. Take stock or stock options. If you are a business owner, leave the money in the business. Vince Cable agrees – but thinks the solution is to put the CGT tax rate up to match. You can imagine my reaction to that! Afterall I campaigned long and hard to get it reduced to 10% for business owners in the late 1990s – only to find it increased to 18% in the last budget. If they tax the sale of a business at 60%+, even I would leave the UK.

But there are ‘bits to like’ too. Getting the growing number of young, unemployed youngsters into some meaningful education or work, is obviously close to my heart as my work with the Prince’s Trust will testify. Doubling Capital Allowances for one year might bring forward some IT hardware purchases. The extra funding on Broadband might give us a speed where we can watch iPlayer even here in darkest Farnham. The £750m Innovation Fund sounds good – except I’d always thought the private sector was better at picking winners. But these are all small beer and will have no real effect on the Big Picture.

And the Big Picture right now seems to be a cross between a Disaster movie and a Disney fairy tale. All with no reliable ‘running time’. We are all set to watch this one for years to come.