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In judging this Budget, context is everything. In Part One of our analysis Policy Exchange looked at the forecasts which govern what the Chancellor can do, and what he cannot. We now turn to look at the decisions taken at the Budget.
The Irish border issue is now taking a central place in the Brexit negotiations. Conventional wisdom in both Dublin and Brussels is failing to recognise that the border issue can be solved. Policy Exchange’s Chief Economic Adviser Dr Graham Gudgin, one of the leading authorities on cross border economics, explains that technological developments mean frontiers are already more than fixed lines on a map – and that elements in the Irish Government and the Commission are being far too slow to acknowledge this, preferring instead to engage in “Brit-bashing”.
In Part One of Policy Exchange’s analysis of the Budget, Chief Economic Adviser Dr Graham Gudgin looks at the forecasts produced by the Office for Budget Responsibility. These official forecasts are the basis for spending decisions today and planning for the future – which means they must be robust. As we saw with the overly pessimistic Treasury forecasts regarding Brexit, they are not always right.
Beware excessive “declinism” – we’re putting more money into UK defence but American warnings must also be heeded
Policy Exchange’s Gabriel Elefteriu warns that we should beware the declinist narrative that too often pervades discussion of UK defence capability. He cautions this can too often verge on a self-fulfilling prophesy and we should acknowledge that the Government is now increasing defence spending. Equally, it is important that American warnings are headed, particularly on the retention of specific capabilities.
‘Without sound finance, you cannot have a strong economy with which to fund public services’ – the moral the Chancellor should choose for his Budget
Policy Exchange’s Research Fellow in Economics, Mike Taylor, sets out the guiding principles with which to judge the Autumn Budget. Highlighting the importance of fiscal sustainability, Mike cautions those seeking to use the Japanese experience to justify higher borrowing, pointing out the limits of any comparison with the UK.
A sensible deal on the Northern Ireland border is very achievable – Brussels and Dublin should stop playing games.
Policy Exchange’s Chief Economic Adviser, Dr Graham Gudgin, sets out how a workable deal on the Northern Ireland border could be delivered – without the return of a ‘hard border’. He says that the Irish Government and European Commission are using the issue for short-term political gain.
Ahead of the Budget, Policy Exchange’s Head of Housing and Urban Regeneration Susan Emmett wrote for Huffington Post about how “Money alone will not fix the housing market”. She says “Local backing for developments is more likely if they have regard to the aesthetics and impact on local infrastructure” and calls for “consistent direction, not only from Whitehall but also from all levels of government up and down the country”.
The Chancellor should not give in to the temptation to “give what amounts to protection money to the union lobby” and increase school funding in next week’s Budget, argues Policy Exchange’s Head of Education and Social Reform John Blake in the Times. “We can have world-leading schools without breaking the bank, but not if our school system believes there will always be more money whatever happens.”
Last week, Chuka Umunna spoke to Chatham House in a much-needed intervention on the state of British foreign policy.
In recent years, the British foreign policy debate has not kept up with the pace of global political and economic change. For that reason alone, there was much to commend in Umunna’s sense of urgency. To adapt to the challenges of the twenty-first century, as he put it, “we need to look ahead and develop a proper national strategy on the basis of a clear understanding of what our interests are”.
Today’s quarter point rise in interest rates by the Monetary Policy of the Bank of England is notable as the first increase in ten years. But at 0.5% Bank Rate is still at extremely low levels. Indeed today’s move merely reverses last August’s quarter point cut, which was an easing of policy designed to help offset the anticipated slowdown in growth following the EU referendum result. Given that by the end of last year it was clear that the economy was actually in fairly good shape it would have been prudent to have reversed this last rate reduction several months ago. But it is better late than never.