Mixed British Budget

The new budget by the new British government is focused on austerity measures, which is good since the British deficit is far too large. However, the emphasis seems to be too much on tax increases, rather than spending cuts, most notably an increase in the VAT and an increase in capital gains taxation.

By weakening incentives this will reduce structural growth in Britain, something which in turn will make it harder to reduce the deficit. Unless further cuts are implemented, the structural deficit will not be eliminated by these measures.