Britain's 2008 Budget

One hour ago the Chancellor here in Britain gave his Budget speech for 2008. Here is our immediate response.

A "no change" budget

Most of the measures announced were either small or insignificant. This was a no change budget. We believe business and the broader public will be underwhelmed and quite frankly, in a time of global financial upheaval, strong leadership is now required.

There was much trumpeting of past success but very little about the future and how the government was going to prioritise competitiveness and skills.

International competitiveness

We agree with the Chancellor’s opening quote that Britain is "one of the best places in the world to do business". On many measures the UK has thrived as the booming markets for capital and talent have favoured the strategic advantages offered by our capital city, London.

However, this positive perception is now being undermined by the 80% increase in capital gains tax and the introduction of fresh taxes on so called "non-domiciles". Indeed in Switzerland, where we have offices in Zurich and Geneva, these tax initiatives have made headlines and many of our clients and candidates have been surprised by the negative publicity this has attracted. An own goal in global competitiveness terms.

In summary we are disappointed that the opportunity was not grasped to lead the world in the current economic crisis

- no further signals on corporation tax reductions were given other than confirming the new rate of 28% going forward.

- no mention of technology, or any initiatives in accessing and attracting high tech skills in a knowledge based economy.

- no U-turns were announced on the controversial taxes on capital gains and non-domiciles.

Growth Downgraded

The Budget speech also downgraded UK GDP growth to a low of 1.75% this year from between 2-3% in 2008/9. Lower tax receipts and lower growth will result in higher than expected borrowing, so projections were adjusted accordingly. The leader of the opposition party noted that the UK has the highest interest rates in the G7.

Tax increases

In essence it was a tax raising budget with significant increases in alcohol, tobacco and larger-engined passenger vehicle excise duty. It could not be described as a green or low carbon Budget as some expected. The measures will largely allow for increased benefits for the elderly and children with the remainder plugging the hole in the public purse as a result of the slowdown.

In conclusion we agree with the Director General of the CBI, Richard Lambert, in his most recent statement on Britain’s competitiveness.

"In today’s world of global markets companies have more choices to make about where to invest their capital and their talent than they did in the past....the worry is that on current trends our position relative to other developed economies will deteriorate further in the next two or three years."

Today our government missed the opportunity to turn around that perception and begin to head in the right direction.