George Osborne's five biggest mistakes
Ahead of the Budget later this month, George Osborne is looking stuck. Desperate to generate more growth, the Bank of England has kept interest rates at 0.5%.
The grim performance of the UK's nil-growth economy looks increasingly personal. Calls for a Plan B are strengthening. What, then, are Osborne's biggest gaffes so far?%VIRTUAL-SkimlinksPromo%
Osborne slashed the tax rate for earnings over £150,000, claiming the tax raised "next to nothing". But this tax cut raised a lot of money for those earning more than £150,000 - worth around £1bn for the 1% of top earners in pension tax relief. A tiny minority gained while universal benefits were hit by lower-than-inflation caps. Meanwhile around 400,000 people were dragged into the 40% tax band. Fair? Many voters didn't think so.
Slashing top rate of tax
The gap between a (comparatively) few number of City professionals and the rest of the country sits uneasily with voters, from small-C Conservatives to Labour heartlands. This unease is increasingly shared by politicians across party lines - and the EU. Witness Osborne's crushing defeat earlier this week when 26 EU finance ministers imposed curbs on bonuses. But the reality still isn't hitting home.
Bank bonus disconnect
Failure to stamp firmly on tax avoidance. Last year nearly 25% of all the UK's listed companies paid no corporation tax in the UK. Osborne doesn't want to drive the likes of Starbucks and Amazon away. But he (and the Cabinet) have failed to tackle the financial arrangements of the companies behind many famous brand names with conviction. Meanwhile many UK small businesses are being eaten alive, particularly by large online operators.
Too nice to Amazon and Starbucks
Not breaking up RBSRBS has had billions in taxpayer cash - around £45bn - thrown at it yet the bank is still failing to get behind small businesses. Sir Mervyn King, losing patience, told Osborne to sort the situation out last year: "I do not believe its beyond the wit of man to devise a plan to restructure RBS and divide it into a healthy well-capitalised bank capable of lending to the UK economy."
Failing to admit he's goofedBorrowing to invest in infrastructure is one of the few levers Osborne has left to pull. Interest rates are low and more public investment would help out two of the UK's (current ) weakest industries, construction and manufacturing. More borrowing, on one level, is unwelcome. But as Vince Cable argues, the balance or risk is shifting. It's not 2008 any more.
Do you agree? Let us know what you think.