We have slightly adapted our annual tradition of predicting the contents of the Budget to make it a contest between the “wisdom of crowds” and our economics team. So we invited SKM’s multitude of engineers, environmentalists, planners and countless other specialists to come together to see if they can outperform our economists. And they responded in their hundreds.
Interestingly in most areas our economists and “wise crowd” agreed with each other but there were some significant differences. These were as follows:
- So while our economists expect the 50% rate of income tax to be phased out 56% of our wise crowd expect it to be retained – tax rate reduced to 45% so the economists are claiming half a point
- On fuel duty our economists expect no change while the wise crowd expect an increase with the largest number predicting at least a 2p increase per litre for petrol – tricky this one we are saying the economists were right as no additional change other than the previously announced increase was made
- On Corporation tax the economists predict a reduction to 22% while the wise crowd expect no change – clear win for economists with a reduction to 22% by 2014 announced
- Whilst in relation to the Government’s net financing agreement the wise crowd predict somewhere between £125-149bn while the economists were split. The grey hairs being optimistic and predicting it will be between £125-149bn while the more youthful and exuberant were surprising pessimistic and predicted over £175bn. – grey hairs were correct along with the wise crowd – the figure being £126bn
Both groups expect no change in the basic rate of income tax, that the personnel allowance will increase in line with inflation, that the basic rate of VAT will remain unchanged, that excise duty on beer will rise by 4p a pint, that the Chancellor will resist the temptation to introduce a new mansion tax and that his budget speech will last for between 46-60 minutes.
As for the rest fairly spot on although effectively a new mansion tax was introduced. The personal allowance rose by more than inflation but is not quite yet at the £10,000 coalition government target while duty on a pint of beer rises by 5p rather than 4p. In terms of timing I made it 58 minutes so we got that right as well as VAT and basic income tax predictions.
As in previous years we will compare what the Chancellor actually announces with our predictions and see if we can beat last years 71/2 out of ten success rate.
So the economists are claiming victory over the wise crowd.