By the time you read this article you know what this year's Budget is all about. Neo-liberal philosophy holds that the days of big government belong to the past. Forget about COLA, water and electricity bills and the price of corned beef. These are best left to the market and the invisible hand. Budget Day is to become just another day.

The truth is that more than half of all the income earned by the Maltese still goes to the government and public entities. So what the government does, or does not, is still very important for our welfare and the performance of our economy. This is why Mr Joe Citizen is very much interested in the Budget. This is why last night we were all glued to the television set or the radio. The Budget gets us all together much more than any other event. Perhaps, Budget Day should be declared our National Day.

Of course, I realise that Budget Day brings divide as much as unity. That is the Maltese way of life; a sign that we care about such matters. Just listen to the media this morning. We should all be rejoicing for each one of us will get something. Some of us are never satisfied, they conveniently forget about the global recession and the rising prices of crude oil and seem to have their own agenda. Like the opposition that never fails to criticise and raise expectations. If the opposition were in government they would do the same, if not worse. So the story goes on and on. Very few of us could have genuinely hoped to rejoice this morning. Christmas is far away. Many could be content counting their savings rather than their gains.

It is a sign of the times.

There is talk that the world is coming out of recession. The key question is whether these crippled economies can stand on their own feet or are they reliant on continued big spending by their respective governments. The US economy, in the September quarter, registered a 3.5 per cent growth rate and has joined France, Germany and Japan out of the recession. What is particularly worrying is that these green shoots are not leading to new jobs. Too many workers have no jobs. There are 15 million and 22 million workers seeking employment in the US and the EU respectively.

These anaemic signs of recovery have led to a quick rebound in oil prices, which seem to have now settled at about $75. There are too many vested interests working to push the price of oil upwards. Many oil dependent economies, like Iran, need a price of about $95 a barrel to balance their budgets. The world economy does not yet afford such high prices; they are primarily due to speculation rather than real demand. Unduly high oil prices too present a threat to economic recovery.

The price of oil for a country like Malta is also dictated by the value of the euro compared to the US dollar. During the 2008 financial crisis, the greenback did very well, as investors sought safety in Treasury bills. Initially, its value rose by some 13 per cent. However, over the last six months, the dollar has been falling steadily. Now it hovers around $1.50 to the euro and expert opinion holds that the dollar will not recover in the short term.

A strong euro should protect local consumers from higher oil prices and imported inflation in general. It also puts additional pressure on our exporters and tourism enterprises, especially those operating outside the eurozone. In the build-up to the Budget, the Malta Employers' Association claimed that some 1,000 low-skill jobs could be lost if enterprises were forced to bear the full impact of COLA. No workings were given as to how this figure was arrived at.

It is a shame that the pre-Budget exercise has become a road-show, leaving little room for professional analysis. No wonder that the employers rebelled when it was made known that the government was also considering raising electricity and water rates. This is asking too much from many of our firms. It will inevitably fuel a new round of inflationary pressures that will hurt our country's competitiveness at a time when we can least afford it.

Our only hope lies in reviving tourism and attracting foreign investment to help kick-start the economy. The government has little room to manoeuvre. The national debt will soon hit the €4 billion mark and government spending is already supporting consumption rather than investments. The construction industry, which has been the prime driver of domestic growth, is in a slump. This industry requires buyers and not more permits.

Let us hope that yesterday's Budget proves to be more than just an accounting exercise and that it includes measures that will truly help stimulate the economy and encourage people to buy and invest.

This is no mean task. The real challenge for our economy, and for our society, starts from this morning.

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