The three things that most directly affect my working world are legal developments, technology, and economics, and not necessarily in that order. As a result I have tended to post on issues on those areas. Today's announcement about an attempt by the Chancellor to create formal structure about keeping the UK budget in surplus is partly economics (but also political, as commentators have pointed out). This is very much an argument about the benefits of the free market over state directed spending - the view that individuals and companies know better how to spend our national wealth than government does, and so 'tax and spend' should be minimised whenever possible. There have to be exceptions to this - defence, social welfare spending, arguably council housing and other social housing needs, and the many other areas of government support. But there is clearly an attempt here to change the consensus, and shift back towards a "small government" view of the world, to a degree. Business would largely say that is desirable, as would tax payers. At the same time business needs to get its house in order, including more investment now to improve the woefully bad productivity rates in the UK. Only if that happens will we start to see a further shift upwards in the UK's economic fortunes. But returning to the Chancellor's initiative, it reminds me of what an Australian colleague said at the point we went into the 2008 crunch. One of the differences between the UK economy and Australia was that Australia was running a large surplus at the point the crunch took hold, compared to the UK's increasingly enormous deficit. Surely a better position to be in, if at all possible?
The chancellor will attempt to bind future governments to maintaining a budget surplus when the economy is growing, he will announce later.In his annual speech Mansion House speech on Wednesday George Osborne will outline his plan to limit governments to a balanced budget in "normal" times. Mr Osborne first proposed the changes to fiscal policy in January.The announcement comes amid concerns over the national debt, which has doubled since the financial crisis.The plan would legally prevent future governments from spending more than they receive in tax revenue when the economy is growing.