This time next week George Osborne will be preparing to deliver his first budget as chancellor in a Conservative-only government. The summer budget, as it’s being called (probably because that sounds less alarming than an emergency budget) is his second budget in four months, but it will be the first time he delivers it without having to worry about his Liberal Democrat coalitions partners .
At the centre of his budget statement will be the £12 billion of welfare cuts, details of which were noticeably absent in the Tory election manifesto, plus further cuts of £13 billion in Whitehall departmental budgets. There will also be a new set of growth forecasts from the independent Office for Budget Responsibility.
As he works through his options for next week, there was good news for Osborne yesterday, when the UK economy was revealed to be growing at a faster rate than previously thought.
At the same time, the latest GfK consumer confidence survey showed that the elusive feelgood factor is finally returning to the nation, with consumer confidence in June leaping to its highest level in 15 years.
Growth in gross domestic product in the first quarter has been revised up from the initial 0.3 per cent estimate to 0.4 per cent, thanks largely to a better than expected performance from the construction sector over the opening three months of the year. First estimates from the Office for National Statistics had indicated a sharp slowdown in the sector.
There was also an upgrade to the final quarter of 2014, with growth put at 0.8 per cent rather than 0.6 per cent. For last year as a whole, growth was revised up from 2.8 per cent to 3 per cent, the economy’s strongest performance since the financial crisis struck.
With the recovery expected to strengthen as the year progresses, some economists are predicting Britain might turn out to be the fastest-growing economy in the G7 nations this year. However, with Greece teetering on the brink, forecasting at this stage is even more of a mug’s game than usual.
Meanwhile the six-point post-election bounce registered by the GfK confidence barometer took the overall measure of confidence to seven – a score that was last seen at the turn of the century, when Tony Blair’s Labour government was in power.
Describing the upturn in confidence as “dramatic”, GfK’s Joe Staton said increasingly optimistic consumers, encouraged by the acceleration in real wages, were now much more willing to spend, particularly on large one-off purchases.
With services still dominating Britain’s unbalanced economy, the findings bode well for the chancellor and the UK economy – barring any damaging fallout from the unfolding Greek tragedy.
*********** It must have been a difficult decision for the remuneration committee at Thomas Cook: award former chief executive Harriet Green the maximum bonus and risk a shareholder revolt, but ensure a bigger windfall for charity. Or grant her the minimum award and see the charitable donation fall.
The holiday firm, at the centre of a furious backlash over the deaths of two children while on holiday in Corfu in 2006, has decided to make the minimum award of 4.1 million shares to Green for her 2½ years running the business.
These are worth £5.6 million and Green has pledged to pay one third of the amount – £1.9 million – to charity. Had she been given the maximum award of 7 million shares, however, their value would have been nearer £10 million and the charitable donation over £3 million.
Along with other Thomas Cook executives, Green has been fiercely criticised for her handling of the aftermath of the deaths of Christi and Bobby Shepherd from carbon monoxide poisoning from a faulty boiler. Thomas Cook suffered a consumer backlash when it was revealed the firm had received a £3.5 million payout over the deaths – 10 times the amount given to the parents.
Green said the charities to benefit from her £1.9 million donation would be chosen in consultation with the children's parents. Fiona Walsh is business editor of the guardian.com
