Cover of MoneyWeek magazine issue no 492

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25 June 2010 / Issue 492

The best stocks for turbulent markets


  • The real Budget pain is yet to come
  • The best ways to bet on a silver rush
  • The sheikh making a London land grab


The real Budget pain lies ahead

Until Tuesday, George Osborne was seen as a bit of a lightweight. Not now. He has set out, in the words of ratings agency Fitch, an “ambitious deficit reduction path, that if delivered upon, will materially strengthen confidence in the UK”

Investors agreed: both the pound and the bond markets strengthened when the chancellor sat down after his emergency budget. We do too. We’ve been in the “cut now” camp for a while – we’re more frightened of the consequences of the fast rise in our national debt than anything else. So we’re pleased to see a plan that aims to get the deficit down to £37bn by the end of the parliament.

We’re also thrilled by the outbreak of common sense that much of the budget demonstrates. There are 100-odd families in London getting more than £100,000 in housing benefit, for example (or rather, their landlords are). That’s just silly. Cutting and capping it is sensible. Freezing public-sector pay is also reasonable at a time when private-sector pay is pretty static too – particularly as the genuinely low paid will get a flat £250 pay rise a year. That’s clever too – it helps close the gap between the lowest paid and the rest, but sets no precedent in percentage terms.

But all this fair-sounding stuff is just the start. The real cutting starts with the autumn spending review.

• Read the full editor’s letter here:
The real Budget pain lies ahead