It struck me today that the latest Budget is tangible evidence of the path down which the Coalition Government wants to take the country, and the radical nature of this path. I think Cameron is portrayed as a smoother but more limited version of Thatcher, but the policies are possibly more radical, albeit in a different direction.
20% Corporation Tax was never even remotely achieved in the 1980s. The reform of the benefit system creates a much greater incentive for people to move to work than anything attempted under Thatcher. But most significantly, inflation, the totemic enemy (along with the Soviet Union and the left in general) of the 1980’s now appears to be the unspoken ally instead. Inflation will erode the horrific debt levels (both in the state and private sectors) and the accompanying depreciation of the Pound will increase the competitiveness of exports (at least in the short term), but it will result in a continuing erosion of living standards. The big gamble is will this lowering of real living standards, reduced corporate taxes and tougher benefit rules turn Britain into a lean, cost competitive but also high value added economy, or will it just lead to constant decline? It is one hell of a bet.