The morning after

People have laid claim to the best hangover cure for as long as I can remember. Whether it is an arcane remedy passed down through generations or a new-age cocktail of herbs and berries, we all have methods that we swear by. Following the announcement of a 6% tax increase on booze – with future escalator supplements of 2% for the next four years – in this week’s Budget, it looks like we can all look forward to fewer hangovers. Looking at the bigger picture, however, is the forecast for the UK economy clouding over?

Earlier this decade the Nobel Prize winning economist Joseph Stiglitz reflected on the excesses of economic growth in 1990s America. He argued that Americans staggered through this decade, punch drunk on the affluence generated through unprecedented post-war economic growth. He was critical of the absence of long term financial planning, and predicted that the cost of this would be borne sooner rather than later. He was correct; attempts to maintain growth since the turn of the century have been dominated by a collection of regressive tax cuts that have succeeded first and foremost in deepening America’s social divisions.

In retrospect, maybe we experienced a similar period of growth in the UK at the beginning of this decade. At the time it felt normal, I don’t think many people felt like they were getting rich overnight or living ostentatiously. But looking back this was a strong period of growth, and there are now attempts to develop political capital by suggesting that the Government should have put money aside during this time.

Ultimately I tend to think that a hangover is best dealt with in one of two ways. You either go back to bed or you get up and get on with it. The first option isn’t palatable for the British economy, the second is the reality. The predictions for the future are not for recession and not for a terminal slowdown. This budget reflects that; it isn’t radical and will have a small impact on everyday life; the rest is down to us.