Money Matters with Adrian Murphy

Dec 9 2011 by Lisa Boyle, Ayrshire Post (main ed)

As you may have noticed George Osborne delivered his second Autumn Statement this week against a pretty gloomy economic backdrop.

What is absolutely clear from the myriad of figures trotted out by the chancellor is that his austerity plan has been a failure.

Despite the current hardships being experienced across the country, and in particular the public sector, the forecast for government borrowing is no less that it has been over the last two years.

Not only that, but the squeeze on spending has had exactly the same effect on GDP with growth forecasts down from 2.5 per cent to 0.9 per cent (which is likely to be over generous).

So is there light at the end of this very long dark tunnel?

In short…..yes!

The economy needs a kick start which may well come from the £40 Billion of spending George has committed to capital projects (which conveniently fall outside of fiscal targets).

If this funding has the desired effect and motivates private investment into major infrastructure and commercial projects then it will go a long way to help stimulate growth.

Other incentives for small to medium sized businesses such as credit guarantees will help too.

While you may think that this doesn’t necessarily apply directly to you, if successful it will benefit us all.

There is of course a rather large elephant in the room ……the European debt crisis.

No amount of fiscal manoeuvring will matter unless the Eurozone is able to put its house in order.

At the time of writing the situation is looking cautiously positive with Angela Merkel finally proposing what we have all known for a while the only way to resolve the crisis is to adopt a fiscal union which will allow far greater control across what is the world largest economic power.

This would prevent economies such as Greece and Spain being as kamikaze with their finances in the future and allow the European Central Bank to step in a lot earlier.

By the time this column goes to print there will have been a major European summit after which we will have a better idea of where we are.

So were there any headlines in the budget for you?

Not really but there are a couple of things you may wish to bear in mind:

•Capital Gains Tax allowance to be frozen at £10,600 for 2012-13

*Stamp Duty relief for first time buyers to end on 24th March 2012

•A new Enterprise Investment Scheme offering 50 per cent tax relief for investment in start up companies (more details to come)

•Consultation to begin on the merging of income tax and National Insurance

While none of the above may seem particularly exciting I hope it provides you with some optimism that governments are at least beginning to make moves to extract us from the current malaise that is afflicting the economy.

As ever I am available at moneymatters@murphyfinancial.co.uk if you wish to ask me any questions on the economy or your own financial situation.