The stuff that grabs the headlines whenever a UK Chancellor brandishes his red box is often those inconsequential details. You know the type of thing: 1/2p on a pint of beer, 0.5% duty on shoelace aiglets. It is staggering that a UK Chancellor cares about such things (although I accept we do drink a lot of beer as a nation).
The just-released Autumn Statement had a few such pearlers. The end of physical tax discs, for example. After the economic projections, state pension age and further budget cuts it was what the BBC considered the most significant measure.
The contract for that one probably boosted Accenture’s revenues by several million pounds this year, but in a £1.5 trillion economy it’s hardly the big picture.
The bigger picture
Unfortunately the real important stuff, which often comes in the form of subtle shifts in abstract policy that will have real long term consequences, do not make for the best headlines. Nor to be fair will they have much impact over the next one or two years.
For example, this morning on Bloomberg News Ella’s Kitchen founder Paul Lindley was talking about how he would like to see announcements on education policy, in particular giving schools wider scope to adopt the fabled International Baccalaureate.
This, he suggests, would make a major difference to the long term prospects for the employability of future generations of young British workers.
The Chancellor did mention abolishing employer NICs for under-21 year olds, and a number of other measures covering early education and funding for science. The state of school kitchens featured more prominently in reports, however.
Looking ahead
The double irony is that between such trivialities and ultra long term changes like raising the pensionable age in 2046, the path of the economy over the next two to three years is already pretty well set. That’s just the way economies work, driven by more wonkish and slow-moving factors like real interest rates, household debt-to-GDP ratios and banking sector capital adequacy.
On that front, it is very good news. The overall economy is finally improving. 2.4% growth next year is the highest since 2007. The recent rise of sterling, up 10% since July, confirms the markets view it as sustainable.
Of course there are many factors such as real wages (“standards of living”) and unemployment that still concern some, but these are lagging indicators and it is consistent with a normal recovery. They will improve in time as the economy gets better.
The tech picture
For young tech companies in London this might not feel so different. Tech City has not quite reached the level of importance where macroeconomists keep separate statistics, but it is surely fair to assume the hub has been a vibrant micro economy of its own for several years now.
Nevertheless, healthy growth in the wider economy, and abroad, will only provide further tailwinds. Consumer spending and demand for products will rise. And on the capital side, banks will feel more confident in lending to SMEs.
At a time when, according to Dow Jones, the picture for VC funding in IT looks mixed such news could not be more welcome.
Finally, it is time to consign the austerity debate to the dustbin of history. Whatever the counterfactual of what may have happened had Labour been in power, it is time to look forward.
To the extent that government can make a difference with its tinkering, Mr Osbourne’s war chest is only growing as the 2015 election rolls into view. Even in times of austerity the Chancellor has shown willingness to invest in small businesses and technology. Whatever it was that was missing from the Autumn Statement, it is time to start lobbying for it.
Image Credit:Michael Fajardo