3 intelligent things to say about the Budget

If you're going to a business-related interview, careers event or networking opportunity in the next few weeks, chances are that the Budget will come up in conversation.

You could just read or watch news coverage of the Budget and try to remember some of the announcements when asked about it.

Or you could make sure that you can summarise the overall themes, understand what they'll mean in real world terms, and have your own opinions on this key political and economic milestone. Doing so is what will really impress an interviewer, recruiter or new contact.

To help you, here is a summary of three aspects of the Budget that stood out to us - the relevant policies, their likely impact, our thoughts on them, and some pointers to help you form your own views.

"These changes to pensions are really significant."

Often, budget announcements are heralded with much fanfare and generate a lot of media noise, but actually contain few surprises or genuine reforms. This budget is different.

Osborne announced some huge changes to the way pensions will work. The biggest is giving retirees the option of not buying an annuity, a financial product sold by life assurance firms that, in exchange for your pension savings, guarantees you an income proportional to the size of your pot every year until you die.

In order to force people to take the relatively safe but expensive option of getting an annuity, doing anything else with your pensions savings was effectively impossible up until now thanks to a punishing 55 per cent tax rate on pension savings withdrawn as cash beyond a 25 per cent tax free allowance.

To reflect the fact that retirees will now have a much larger range of financial options open to them, Osborne announced that the state will provide them with free impartial financial guidance in the run-up to retirement.

It's hoped this will empower them to find the best and best-value investment option for their needs. Many will still probably end up buying annuities, but the announcement was undeniably bad news for life assurance companies, whose share prices tumbled.

Add your own opinions

  • Do you think pensioners are able and willing to make wise financial decisions themselves so that they don't become a burden on the state - and younger generations still in employment?
  • How could life assurers adjust their business models to respond to the changes, and what if the prices of annuities go up significantly as a result?
  • Have the Budget announcements affected any thoughts you've had about how you might plan for your retirement?

    "That growth figure might not be as good as it looks."

Osborne reported that the Office for Budgetary Responsibility (OBR), a body independent of government set up by the coalition government in 2010 to make economic predictions, expects the UK's economy to grow by 2.7 per cent in 2014, up 0.3 per cent from the estimate given in last December's Autumn Statement.

This figure was trumpeted by Osborne as a sign that the UK's economic recovery is on track and as an endorsement of the government's economic policies.

But while this economic growth is undoubtedly good news in many ways, it's worth remembering that it's been generated in large part by rising house prices, up by 8.4 per cent last year, and by increased consumer spending. Economic growth stimulated in these ways tends to lead to boom and bust conditions.

The government is trying, however, to nurture more sustainable economic growth, particularly by encouraging manufacturing and exporting.

Osborne announced a package of measures to help businesses producing goods in the UK and selling them abroad, including providing them with cheaper loans, reducing their energy bills by capping carbon emission taxes, eliminating some taxes on long-haul flights, and providing more investment in various science and engineering research projects.

Add your own opinions

  • Do you think promoting the UK's manufacturing and export sectors is a good strategy for economic growth?

  • Are the economic benefits of limiting carbon emission taxes and promoting long-haul flights worth the potential environmental costs?

  • Do you think this government will succeed in freeing the UK from extreme boom and bust cycles?

    "There wasn't much in the Budget for young people."

It seemed fitting that this year's Budget included the announcement that a new pound coin will resemble the threepenny bit, last in circulation in 1971 and only likely to be remembered by those over 40 (see picture).

There was some potentially good news in the Budget for young people - for example, an increase in the amount of income you can earn tax-free which benefits those at the beginning of their careers proportionally more than higher-earning employees, support for those entering postgraduate studies, and some steps to tackle the lack of affordable housing in the UK.

But there was nothing comparable to the new and existing economic measures specifically designed to help older sections of the population.

For example, Osborne announced a new high-interest savings product for pensioners but missed a chance to do something similar for young people, who arguably need to be encouraged more than pensioners to save and will also suffer from long-term low interest rates.

And the controversial Winter Fuel Allowance for all over-60s regardless of income stays in place, while many young people are also at risk of suffering economically and even physically as a result of high energy bills.

The reason for the government's explicit focus on older generations is obvious: there's a general election coming up next year and they're more likely to vote, and to be inclined to vote Tory, than those in other sections of the population.

Add your own opinions

  • What measures would you like to see in the Budget specifically for young people?

  • Should young people vote more, or instead campaign for changes to our electoral system to make Parliament more representative and relevant to the UK's population as a whole, such as compulsory voting or even selecting MPs by lottery, as some political thinkers have recently suggested?

  • Is there a risk of increased political unrest among young people as a result of the measures outlined in the Budget?

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