Star Builder

Yesterday the Chancellor George Osborne presented the cuts agreed by the various departments to the House of Commons. Since then many analysts and media pundits have slice and diced the information in many ways looking to see what the impact for various sections of our society.

The reality is that nobody can tell what the impact is going to be to you and I, sure people can look at the first level impacts and take a guess what it means to you in terms of tax, loss of child benefit etc, but then there is the secondary effects. According to the experts, if you're lucky enough to be a middle income family that does not face losing your job as one of the 500,000 in the public sector, you'll only be suffering a loss of £2,500 per year.

If that is not painful enough for you, the secondary effect is much more complex and far more likely to present a sting in the tail for you. Like a pebble in the pond, the ripples interact in a way that is difficult to predict, the same is true of the economic secondary effects of these cuts.

Let's look at some of the second order effects:

• Rise in fuel duty and VAT meaning the costs of logistics are going to go up, causing the cost of items such as food and clothing to go up
• The cost of train fares are going to rise by up to 30% over the next few years, it means it is likely employers are going to have to increase salaries accordingly, which is difficult in tough times. This also causes inflationary pressures, and means the employer has less money for other investments (including creating new jobs to plug the gap by the public sector cuts)
• The banks are less likely to offer mortgages as the risk of lending to what they perceive to be a worsening job market is too great. What this means for those with buy-to-lets and even residential mortgages it is neigh on impossible to remortgage
• Those laid off will be spending less, which may mean that your company or the company your company supplies has to make cut backs, and so continues the wheel of misfortune...

You get the picture, the only thing you can do to protect your future is to increase your income, and why many like the Star Builder team have chosen to run their own business alongside their day job.