Budget 1995

This is the first Budget since 1992 to provide a reduction in the personal sector's taxation. Although the economy has shown continuous expansion since that time, there is now clear evidence that the growth rate is falling. For the majority of institutional property investments, which require a degree of rental value growth to justify their retention at current prices, the most important issue is economic growth. As about three-quarters of GDP growth is attributable to consumer expenditure, its growth is critical; almost inevitably, this will be stimulated to rise as a result of this Budget.

Not surprisingly, interest rates were not addressed in the Budget speech. Nevertheless, there is a relationship between the amount of tax cuts and the amount by which interest rates can be reduced; both are capable of generating increased inflation and there is effectively a trade-off between the two. The Bank of England is still looking for a rise, although the chancellor had persuaded the