Business leaders believe Alistair Darling's first Budget will make the economic slowdown worse and the Chancellor's reputation among them has sunk to a new low.
A survey of 100 prominent businessmen and women by ComRes found that three in four rejected Mr Darling's central claim that his strategy would help Britain weather the global economic storm. Some 73 per cent said they believed the Budget would contribute to an economic downturn in the UK, while 23 per cent thought it would not.
In the wake of Wednesday's Budget, the number of business leaders who have confidence in the Chancellor's ability has slumped to just 7 per cent, the lowest figure since ComRes launched its "Darling index" last October. Seven out of 10 believe Mr Darling is out of his depth, the highest rating so far, and only 15 per cent think he understands business – the lowest to date.
The survey for B2L Public Affairs found that 78 per cent of business leaders believe the Budget will be bad for the economy as a whole, while 65 per cent believe it will be bad for their own company. Only 3 per cent think the Chancellor's package will boost consumer confidence and 92 per cent believe it will not.
George Osborne, the shadow Chancellor, enjoys the confidence of most of those polled (53 per cent), followed by Vince Cable, the Liberal Democrats' Treasury spokesman (33 per cent), with Mr Darling trailing a poor third on 7 per cent.
Some 62 per cent of business leaders have less confidence in the Government as a result of the Budget, while just 3 per cent have more confidence. Seventy-six per cent do not think the Budget will encourage innovation; 8 per cent think it will.
Yesterday Mr Darling defended what the Tories have described as his "bad news Budget", insisting that his package included help for people facing difficulties such as pensioners and poorer families with children. He shrugged off criticism that he had produced a dull Budget, saying he would "make no apology" for talking about stability time and time again.
We are going through a very turbulent time," he said. "I don't think people were looking for rabbits out of a hat." The Chancellor conceded that the next year would be difficult, but said: "I'm very confident that because our economy is strong, is resilient, we can get through it."
Mr Osborne rejected Mr Darling's claim that the current economic difficulties were the result of the global credit crunch. He insisted the country was paying the price for Mr Brown's "economic incompetence" during his decade as Chancellor. "It's not the fault of some sub-prime estate agent in Mississippi that we enter a downturn borrowing £36bn – it's the fault of the Prime Minister," he told the Commons debate on the Budget.
The shadow Chancellor said: "It's not the fault of Wall Street bankers that we have the highest tax burden in our history – it's the fault of the Prime Minister. It's not the fault of some capitalist conspiracy that some five million of the lowest-paid people in Britain face a tax increase this April – it is the fault of a Labour Prime Minister who is trying to fix his economic problems on the backs of the poor."
Experts said that the Government's revenues could receive a surprise boost as a result of a decision in the Budget to auction carbon permits under the European emissions trading scheme. Professor Paul Klemperer, principal auction theorist behind the Government's £22bn auction of third-generation mobile phone licences, believes the Government could raise even more from the 100 per cent auction of carbon permits. He told Channel 4 News that his estimate of the money raised by the British exchequer would be between £25bn and £35bn over the seven-year third phase of the scheme. Across the EU, governments could raise more than £200bn.
Mr Darling said it was too early to put a figure on any windfall from carbon auctions. "It's not possible to say how much it will raise, but it's surely money we can use to do other things to help with climate change, for example, transport," he said.
He insisted it was now the right time for government-backed carbon auctions, saying "It's been wrong that electricity providers have got a windfall gain".Reuse content