THE best from the budget is that tax, spending and deficits increased at slower rates than expected.
The worst is that it increases the likelihood of prolonged stagnation, along with the world’s highest sustained unemployment rate, extreme welfare dependency and a business-unfriendly environment.
This is the conclusion to be reached based on world experience. When governments grow, economies stagnate. The budget increases government revenue from 28.1% to 28.4%, and spending from 32% to 32.2% of GDP. Based on the optimistic, some would say unrealistic, assumption that deficits will fall, money diverted to debt servicing will rise annually: R115bn (2015), R126bn (2016), R141bn (2017) and R153bn (2018).
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Leon Louw is the President of the Free Market Foundation.
Publish date: 26 February 2015
The views expressed in the article are the author’s and are not necessarily shared by the members of the Foundation.