LAST week’s budget contained several interesting and innovate features while managing to signal continuity with the deficit reduction plan.

Fiscal policy - taxation and public expenditure - was, essentially, neutral but includes, for example, a further boost to take-home pay by lifting personal allowances (38 000 people in the Valleys and Vale will benefit) and continued protection for health, international development and education spending.

Monetary policy has been overhauled. Monetary strategy is going to be ‘longsighted’ by linking interest rates and, possibly, gross domestic product growth with the inflation target of two per cent.

This boils down to maintaining lower interests rates for longer periods.

The key requirement to increase money’s velocity of circulation should be met by the banks and, to some extent, by the announced mortgage support measures.

Supply side reforms are, perhaps, the most interesting. The launch on the Industrial Strategy with some £1.6 billion to support it is a signal step in the right direction.

The new aerospace centre for excellence is just one example of the identification of an industrial sector with huge potential for growth now being earmarked for investment.

The same treatment is required for the automotive industries because Britain must produce more components at home for the now 1.5 million cars we produce each year.

With many engineering firms supplying such sectors in the Valleys and Vale, these measures will have a positive impact locally.

The budget also took another hard look at skills, training and employment.

Since 2010, 1.25 million new jobs have been created in the private sector but, so far, productivity has not increased and, in part, is due to the scarcity of relevant skills.

Reforms in education are the backbone of the government’s strategy and these are reinforced by reforms to the labour market but the budget has taken this further forward by strengthening sector councils and giving a £2,000 ‘employment tax break’ to all firms.

We still have a long way to go to fully rebalance our economy and solve the deficit and debt problem but this budget moves us in the right direction.

If you are interested in the issues raised above, please contact me on 01453 751572 or visit my website - www.neilcarmichael.co.uk. Now, you can also follow me on twitter @neil_mp. Neil Carmichael