Chancellor's growth predictions 'ridiculous': Kent expert

The Chancellor of the Exchequer's forecast that the UK economy will return to 3.5 per cent growth in 2011 was branded "ridiculous" by a Kent expert.

Alistair Darling said in his 50-minute Budget speech that UK growth would fall back by 3.5 per cent for most of the year before picking up by the end of 2009.

He forecast 1.25 per cent growth in 2010 and 3.5 per cent in 2011 before returning to "trend" of around 2.5 per cent.

But Alyson Howard of Pembury-based Meta Corporate Finance and former chairman of Kent Institute of Directors saw little chance of Mr Darling’s forecast being accurate.

The Government had spent "recklessly and inefficiently" and there was nothing to attend to that issue.

"His growth forecast of 3.5 per cent in 2011 looks ridiculous," she said. "To come out of recession of this depth with perhaps a breakeven or slight growth next year and then rocket straight to 3.5 per cent the year after seems unlikely and traditionally we’ve seen Alistair Darling’s forecasts are very wrong."

Mr Darling blamed the nation’s problems on the "unprecedented financial crisis and deep widespread global recession" in what several commentators dubbed a "political Budget."

With the Tories ahead in the polls, it could be Mr Darling’s last, or at least penultimate, Budget before a General Election that must be held by May 2010 at the latest.

He said the Budget was based on "our values of fairness and opportunity." But Tory leader David Cameron countered by attacking Labour’s "decade of debt" and borrowing of £606bn. "Our children are going to be in poverty for decades," he said.

Mrs Howard said the Budget offered some small benefits for the county’s businesses. "But what SME Kent needs is an improvement in the overall economy.

"It’s hard to see how, with the Government persisting in its excessive and inefficient spending which has led to total debt of 80 per cent of GDP, we can ever recover in the short term. In effect, we are all mortgaged to the absolute limit."

But Mrs Howard backed the car scrappage scheme which offers a £2,000 rebate to anyone trading in a car over 10 years old for a new greener vehicle. Her Citroen AX is 20 years old and she would be taking up the offer. "Much as I love my car, it’s not worth £2,000," she said.

Malcolm Hyde, CBI South East regional director, agreed that the Chancellor’s economic forecasts looked optimistic. Given that the UK relied heavily on the South East economy, this was a concern.

The Budget failed to set out a credible and rigorous path for restoring the public finances to health. "By pushing out the horizon for balancing the books as far as 2018 the Government is running too much of a risk," Mr Hyde said.

He welcomed a few "micro measures on the fringes of the Budget" that would give business easier access to trade credit insurance and help carmakers with a scrappage scheme that gives a £2,000 discount to anyone trading in a car over 10 years old. Changes in investment allowances and the ability for firms to carry forward losses were also welcome.

"But taking the Budget as a whole, a lot will depend on how far the Government can reduce public expenditure growth through public service reform and cultural change."

Richard Holme, a tax partner with Creaseys of Tunbridge Wells, said the 50 per cent income tax band from next April for people earning over £150,000 was a "jaw-dropper."

While the Chancellor spoke for 50 minutes, Budget detail was contained in 220 pages of press releases and another 450 pages of consultative documents which he and his colleagues were trying to digest.

He said there was an immediate "nasty" change on tax relief on pension contributions, and holiday lets, including those abroad, would incur extra tax. "I don’t feel it did enough to encourage business," he said, "and didn’t really help the so-called green shoots of recovery."

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