Today’s front pages concentrate on the so-called ‘granny
tax’, the surprise of the Budget. But the real test of this Budget is going to be whether it delivers growth. If it does, then it will make a Tory majority in 2015 more likely. If it
doesn’t, then the decision to cut the 50p rate will become even more politically problematic.
Given that the Budget is fiscally neutral, this growth is going to have come from either the couple of supply side measures in the Budget or by finding a way to unleash those elusive animal
spirits. Indeed, I think this desire to boost confidence is one of the main reasons that the 50p rate has been cut. As Camilla Cavendish says in her column (£), George Osborne has been gravely concerned by the business backlash at how the
government helped force Stephen Hester to give up his bonus and desperately wants to show that, to use his phrase, ‘Britain is open for business’. But, crucially, he also wants to show
that this government is prepared to take political risks to back business.
The cut in the 50p rate wasn’t the only pro-business measure. There was also a further 2p cut in corporation tax rate, planning
reform and hints of further deregulation to come in the labour market. The question now is whether business, both British and global, will respond to these signals.
Hat-tip, for the image: Tim Montgomerie