Britain’s chancellor, George Osborne, kept his budget firmly in the center of British politics on Wednesday when he unveiled a combination of tax and spending policies that should satisfy either side.
To the delight of his Conservative backers, Osborne announced a fall in capital gains tax — which he raised in his very first austerity budget — from 28 to 20 percent and a reduction in corporate tax from 20 to 17 percent by 2020.
“Britain is blazing a trail,” he said. “Let the rest of the world catch up.”
Smalltime entrepreneurs will also benefit from a tax break worth up to £2,000 per year for income from goods sold on eBay and rooms rented out via Airbnb.
But property owners are set to lose out. Landlords will face a 3-percent stamp duty surcharge when they buy rental properties. Osborne specifically rejected proposals to exempt big investors.
The chancellor revised Britain’s growth forecasts downward from 2.4 to 2 percent for 2016 and from 2.5 to 2.2 percent for 2017, blaming a “dangerous cocktail of risks” in the global economy.
“Our economy is strong, but the storm clouds are gathering again,” he said.
As a result, Osborne admitted that he would not meet his promise to shrink the debt as a percentage of gross domestic product this year.
It is the nth time Osborne has relaxed his fiscal targets and a reminder that he “is not quite the state-slasher of legend,” argues Matthew d’Ancona in The Guardian.
The chancellor’s budget speech on Wednesday was a center-right one, according to d’Ancona, “not a love letter to the Tory right.”
This chancellor understands that his party’s electoral future lies in the center ground vacated by Jeremy Corbyn. Were he to succeed [Prime Minister David] Cameron, the Conservatives would plant their standard squarely in that terrain.
Osborne has rejected suggestions from the right to pursue a more uncompromising policy even as Labour’s lurch to the left under Corbyn might allow it to do so.
Conservatives have a “big responsibility to represent the working people of Britain on the center ground of British politics,” he said last year, perhaps with an eye to the long term.
In another speech, he called on other Conservatives to persuade help Labour voters the party is on their side.
“They want security and opportunity, but they didn’t quite feel able to put their trust in us,” he said. “We’ve got to understand their reservations.”
Osborne may be more of a liberal than a conservative and is, with Cameron, the co-architect of the “modernization” project that tempered the Tories’ right-wing instincts and helped them win back a parliamentary majority last year for the first time in two decades.
Osborne has since outflanked Labour from the left by introducing a £9 hourly minimum wage and raising the income tax threshold, taking the lowest paid out of tax altogether.
But Osborne also announced an additional £35 billion in welfare savings last summer that are bound to affect many at the bottom of the wage scale. Among the measures are a freeze in most working-age benefits and disqualifying Britons under the age of 21 from housing subsidies.