Robert Peston: How the budget affects you
It's been almost two weeks since the new coalition government announced their and now the dust has settled, it's time to take stock and look at how it will really affect us. Robert Peston, the ´óÏó´«Ã½'s money expert and presenter of the ´óÏó´«Ã½ Three show On The Money, examines what the impact will be......
Robert Peston writes:
This was a very big and important budget which will have implications for all of us. Thanks for all your comments about your experiences.
In respect of its impact on young people, I would single out two or three effects.
First, when governments borrow to pay for public services, as has been happening to a record extent in the UK, that can be seen as unfair on younger people.
The debt will have to be repaid one day, through taxation or cuts in public spending. And the longer it takes to impose those taxes or cut that spending, the more it's possible to argue that the costs of today's public services are being imposed on tomorrows' earners, who derived minimal benefit from those services.
So there is an argument that the coalition government's decision to speed up the reduction of the deficit is fairer to young people than reducing the debt only slowly. There is however an alternative view, which is that the government's relatively fast deficit reduction plan, will reduce the growth of the economy and could push unemployment up further.
If that were to happen - and the government hopes it won't - there would be disproportionate pain for young people. Because the evidence of the last couple of years has been that unemployment has been most acute among those leaving schools and higher education.
One final point, the rise in VAT may be particularly uncomfortable for younger people, because they tend to spend more relative to their income than older people and more of their spending tends to go on the kind of things - gadgets, entertainment, clothes - which incur VAT at the full rate.
So if you are under 30, what do you think? Was this a fair budget for young people, or do you think you're being forced to pay for a financial mess created by your parents' generation?
You can watch videos from On The Money with Robert Peston covering issues like debt, pay and banks.
Robert Peston writes:
This was a very big and important budget which will have implications for all of us. Thanks for all your comments about your experiences.
In respect of its impact on young people, I would single out two or three effects.
First, when governments borrow to pay for public services, as has been happening to a record extent in the UK, that can be seen as unfair on younger people.
The debt will have to be repaid one day, through taxation or cuts in public spending. And the longer it takes to impose those taxes or cut that spending, the more it's possible to argue that the costs of today's public services are being imposed on tomorrows' earners, who derived minimal benefit from those services.
So there is an argument that the coalition government's decision to speed up the reduction of the deficit is fairer to young people than reducing the debt only slowly. There is however an alternative view, which is that the government's relatively fast deficit reduction plan, will reduce the growth of the economy and could push unemployment up further.
If that were to happen - and the government hopes it won't - there would be disproportionate pain for young people. Because the evidence of the last couple of years has been that unemployment has been most acute among those leaving schools and higher education.
One final point, the rise in VAT may be particularly uncomfortable for younger people, because they tend to spend more relative to their income than older people and more of their spending tends to go on the kind of things - gadgets, entertainment, clothes - which incur VAT at the full rate.
So if you are under 30, what do you think? Was this a fair budget for young people, or do you think you're being forced to pay for a financial mess created by your parents' generation?
You can watch videos from On The Money with Robert Peston covering issues like debt, pay and banks.
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