There was a lot of spending but where were the cuts?

The root and branch review of the fiscal framework looks interesting and could imply austerity is well and truly over in the light of low interest rates.

Written by Garry White, Chief Investment Commentator at Charles Stanley Wealth Managers

· I understand why the Chancellor has made growth forecasts, but we should all understand that it’s almost impossible. These forecasts are very bullish and could be taken with a pinch of salt.

· There was some positive news for retailers and the Chancellor has gone further than expected which was totally necessary.

· This is the first time that the OBR has forecast a rise in productivity in the UK. Cynics would say that’s from a particularly low base.

· Entrepreneurs’ relief is controversial but following advice from the Federation of Small Business and cutting lifetime limit seems broadly sensible.

· The increase in R&D spending support to £25 billion is essential if we are to make the most of the Brexit opportunity.

· Plastic packaging tax is good policy. The industry was moving that way anyway, but nudges always help.

· £500 million to roll out electric vehicle charging plus £1 billion on green transport is welcome. Consumers are confused and we are holding off buying cars as a result and the messages that electric is the future helps both consumers and carmakers.

Past government policy on diesel engines has made consumers very cynical. For years, car-buyers were told that diesel engines were the answer, with the government deeming them the cleaner and greener option. But, unfortunately, none of this was really true.

The diesel emissions scandal – when carmakers were found to have manipulated pollution tests – resulted in a change in policy. Politicians who had told people to buy diesel cars, then turned against the engine – much to the annoyance of consumers who had followed their advice. Diesel went from environmental poster product to environmental problem. Authorities are now claiming that electric vehicles are the way forward, but will this always be the case? Will there be a change of policy in the future? The diesel issues destroyed trust – and hit the re-sale value of their vehicle.

That’s why the support for electric vehicle infrastructure in Rishi Sunak’s first budget as Chancellor is vital to support the shift to cleaner transport. Mr Sunak unveiled significant investment in electric vehicle charging infrastructure around the UK, which will ensure that drivers are never more than 30 miles from a rapid-charging station. Not only does this put some essential infrastructure in place to encourage more people to buy electric, but it also sends a clear policy message to people holding off from buying new cars. The government is committed to promoting electric vehicles and is prepared to invest in the infrastructure – this implies you can buy an electric car with confidence. It’s good for consumers, carmakers and the environment.

There was a lot of spending but where were the cuts? Is the Chancellor really that bullish on the UK economy despite the Coronavirus unknowns but maybe they are hidden in the red book? Corporation tax wasn’t cut as expected because of the Coronavirus spending measures but it may appear in the next budget later this year.

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