The 2016 Budget was a smart package with some real vote winning elements but it was light on big surprises or bold moves, something evidenced by the fact that a ‘sugar tax’ on fizzy drinks stole the headlines.
Clearly something needs to be done about child obesity given that when I was at school each class pretty much had just one seriously chubby kid, whereas now they seem to be a significant (and expanding) segment of society.
The matter is not something you would, or should, expect to be leading news roundups on Budget day however, and there is a lot more to it than a drinking a few too many cans of Pepsi in any case.
What Osborne’s Budget did accomplish was to gently sweeten the deal for many tax paying voters, who completely coincidentally are due to turn out soon in the upcoming referendum on Britain’s European Union membership. You would not exactly have to be the most belligerent of cynics to think the referendum outcome and Osborne’s own political future played a part in what he announced.
Tweaking the level at which 40% income tax hits so slightly will please those who will have a few more quid in their pockets but have no real impact on the UK economy or indeed UK equities. The same can be said for raising the starting threshold to £11,500.
Bumping up ISA allowances is another welcome voter-friendly change, and should be a minor win for equities and retail investment providers, but it is not going to trigger a surge in the FTSE.
Over the long term the corporation tax cut to 17% could be the real winner in amongst the myriad of measures. Companies have demonstrated a clear willingness to hop around the world looking for favourable tax regimes, as evidenced by Ireland’s success in attracting some big international companies which did not set up their offices there for the weather.
