Three thoughts on the UK budget.I think consumers main concern now is their mountain of debt and how they are going to pay the interest, never mind the capital. Are their jobs secure? Is the value of their house going to go back up again? Negative equity on the car and a mountain of credit card debts. I think, and may be wrong because not everyone is in debt and not everyone worries about if they are, that people are more likely to save or pay off debt with a little extra cash than go out and spend it. So I don't think cuts in taxes are going to do the business in encouraging consumer spending.
The stock markets liked the budget, today at any rate. Well that's okay then. Is part of the success criteria for the budget, that the city will like it? I suspect it is, and is this not the kind of short term thinking that got us into trouble in the first place?
What do we need new roads for? Peak Oil has not gone away and neither has climate change. In fact the problems of Peak Oil just got worse because the low price of oil has stiffled investment in both oil and renewables. I struggle to envisage any scenario that does not involve a decrease in driving in the short term, even the most positivie scenario where we replace some of our transport needs with technology. This budget was a huge opportunity to invest in the energy infrastructure of the country and show that the UK was a sound long term investment. Instead the gamble is that we are all going to start buying again and that energy prices, energy security and climate change are not going to cause a problem any time soon.
