Declining inflation has resulted in a decrease in the cost of borrowing for the U.K. government.
This means that the Chancellor, Jeremy Hunt, could have around £20 Billion more than he thought to play with in the upcoming spring budget.
The most likely scenario is that he will use this money to cut taxes for the average British tax payer...
£20 billion a year is equivalent to around £666 per worker if he were to put the whole lot into one year's worth of tax cuts, or £333 a year if he wanted to be a little cautious and spread this over 2 years.
Better options..?
I'm not 100% convinced tax cuts are the way to go. There are plenty of things that £20bn could be Vested in to encourage growth or save money. For example...
- Renewable energy, could reduce our dependence on fossil fuel imports from abroad...
- You could build a lot of houses for £20 billion.
- Vesting in creaking health and social care
- Tree planting could help improve the environment and flooding.
- Or just pay off some debt and save us interest in the future.
- I mean, I could go on!
It'll almost certainly be tax cuts...
Because this is an election year, with the election most likely going to be called in Autumn, and tax cuts are what desperate governments do as a last throw of the dice to win votes.
And a few hundred extra quid in pockets next year will certainly encourage some people to vote Tory.
However I think for many it will have the opposite effect: more and more people are sick of the lack of long-term solutions being offered up by governments, and tax cuts rather than long-term vests kind of smack of this.
We all know that an ageing population, lack of opportunties for young people, increasingly uncertain global situation and climate change are all problems that an extra £500 a year in our pockets are not going to help with.
What we need is a chancellor and a government with a decent pair of balls, prepared to Vest for the next decade and beyond, not just the next year or five.