UK budget 'fails to tackle major issues'

Despite being dubbed as politically motivated and with an eye on the approaching election, Britain's 2001-02 budget unveiled on Wednesday has sparked mixed reactions among British expatriates in the UAE.

"It's a nondescript budget designed to please the voter and which doesn't tackle major issues that will face the new government when elected," said Terrence Allen, head of treasury and investment banking at the National Bank of Abu Dhabi.

"I don't think the problem of holding Britain's economy from falling into a hard landing has been addressed. If you look closely at the overall planning for Britain's economy and industrial needs, the budget has nothing much. The main concern today is the standard of living in the UK and the concessions that come out of this budget hardly address that. Similarly, property values have soared in real value. Overall, an average budget for vote-catching," he said.

Michael Carter, senior vice-president of treasury and investment banking at the Abu Dhabi Islamic Bank, said the budget was predictable with the elections round the corner. "There are crucial issues which need to be addressed. The high petrol prices, cost of property and the tax burden (indirect tax) in the UK are the highest in Europe, which is appalling," he said.

"There's something for all and clearly such a budget is aimed at the voters to elect the Labour Party again," said the general manager of a firm in Abu Dhabi. There is nothing for the farmers. "Rural Britain is as important as the other parts of Britain," he added.

A British housewife said she found nothing exciting in the budget. As long as worldwide incomes of Britons are not taxed, the budget hardly impacts much on overseas Britons, she said.

Dubai and Northern Emirates residents and analysts felt that the budget holds nothing specifically for British expatriates. But it has been the most generous since that of 1988.
"The budget will have no impact on expatriates. But from the domestic perspective it is clearly aimed at the coming elections," said Murray Sims, head of personal banking at RAKbank.

He pointed out that the reduction in income tax and the widening of the lowest tax band, together with increased spending on education and healthcare, would help the low paid sections of society.

He added that the excise duty cut on motor fuel and the duty freeze on alcoholic beverages — "while a bit unusual" - would also go down well with the electorate and help keep the Labour government in power. "But the chancellor should have helped the farming community, which is struggling to contain an outbreak of foot and mouth disease," he said.

Agreeing that there is nothing specifically for expatriates, Dr. Gerard Lyons, global head of research at Standard Chartered, noted, "This is a pre-election budget aimed at wooing the voters while not shocking the City."

He felt the immediate impact on the currency would be neutral to positive since the economy is in good shape, the underlying financials sound and the political scenario stable. "But the trend towards increased public spending may lead to problems in future, and the tax system is becoming more complex," he said.