Outlook So far, we've seen plenty of talk from the Chancellor, but not nearly so much action. Mr Osborne's treatment of the banks is a good example. For all the rhetoric concerning cracking down on excess and ensuring that the City pays its way, the cost to the banks of the financial levy the Chancellor has unveiled will be met by the corporation tax rate cut he has also announced. And though Mr Osborne has commissioned an independent inquiry into the structure of our biggest banks, there is widespread scepticism that he is prepared to force their break-up, even if that is what Sir John Vickers' Banking Commission eventually recommends.
The good news is that there is an early opportunity for Mr Osborne to prove he is serious about taking on the City. If, as expected, theJanuary bonus round sees £7bn handed over to London bankers, what will the Chancellor do about it? Will he have the nerve to raise the tax burden on the City once more, even in the face of their threats to quit?
Also key this year is the question of whether the Chancellor is really serious about boosting British manufacturing. Though Mr Osborne has repeatedly talked of rebalancing the economy – and Vince Cable, the Business Secretary, promotes advanced technology at every opportunity – what is he doing about it? The abolition of investment allowances, to pay for the corporation tax cut, hit manufacturers disproportionately hard. The withdrawal of the loan pledge to Sheffield Forgemasters also sent the wrong message. This is the year to make amends.Reuse content