The Budget

The Budget

The Budget

Unlike the periodic indications already discussed, where announcements are weekly or monthly, the Budget is normally of annual occurrence in April, although there may be an interim Budget in the autumn.

The Budget is a statement by the Chancellor of the Exchequer of the Government's programme of expenditure, normally over the ensuing twelve months, together with his proposals for raising the necessary revenue. The purpose of a supplementary autumn Budget is usually to adjust the revenue to make up deficiencies

not provided for in the annual statement, and thus operates as an additional economic regulator.

For you as an investor the Budget is an investment indicator, and may provide opportunities for profitable buying or selling.

Any Budget can be described in general terms as (a) in-flationary, (b) deflationary or (c) stand-still.

(a)A budget is inflathmary if it proposed to reduce taxation, whether income or purchase tax, or to increase allowances, e.g., pensions and family allowances, etc., or to lower or abolish certain charges, e.g., prescription charges.

(b)A budget is deflationary if it proposed to increase tan-don in any form, reduce allowances or impose charges.

(c)A budget is said to be 'stand-still' if it provides for no appreciable changes.

It is also time that a particular budget may be inflationary in some of its effects and deflationary in others, and it will be for you, the investor, in the light of well-informed commentary, to form your own judgment on the probable net effect, inflationary or deflationary, of any budget.

If the overall effects of a budget are expected to be inflationary, share prices will tend to rise; if deflationary they will tend to falL

It is important to realise that if you are to benefit from the budget as a share price indicator, you must act in anticipation and before the actual budget statement is made.

WHEN TO BVY. On an anticipated expansionist budget, before the rise in prices.

WHEN TO SELL.--On an anticipated stringent budget, before the drop in prices.

This completes the survey of periodic investment indicators and also those economic factors influencing share prices which arise from government measures. There remain to be considered those economic factors, other than government measures, which (1) proceed from companies' internal policies. and (II) arise from causes outside a company's control.

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