A Budget of paradoxes

 
George Osborne

Off course, but determined to stick to it. Having no money to spend, but still able to deliver tax cuts for people and businesses. This was a Budget of paradoxes.

George Osborne was forced to read out a grim set of economic forecasts - the missing of his debt target, the halving of next year's growth forecast and borrowing up this year on one measure and only down on another thanks to an unprecedented and surely unrepeatable underspend by Whitehall departments (£7bn more than last year).

However, none of this convinced him to take the advice of those urging him to borrow more in an effort to stimulate growth by cutting taxes or investing in construction.

Nevertheless, the chancellor did find money from squeezing day-to-day spending to pay for important personal and business tax cuts and a multi-billion pound attempt to boost the construction industry.

This was a very political speech from a man in a very tight economic straitjacket: demonstrating a Brown-like determination to keep control of the economic statistics even though they are now drawn up by independent forecasters; echoing Thatcherite rhetoric on home ownership ("Help to Buy" follows "Right to Buy"); boasting that he would be delivering his tax-cutting objectives (20% Corporation Tax rate and £10k personal tax allowance); claiming to have taken out of tax all those who would pay the 10p tax band Labour have talked about restoring; promising a tighter spending round than expected and inviting Labour to tell the electorate which tax rises they'd like instead.

It will, though, not be judged by the headlines or by the measures or even by the Budget leak* but by whether the next time he stands up the economic news appears to be any better or worse - yet again.

* In reality not so much a leak as a breach by the London Evening Standard of an embargoed pre-Budget briefing

 
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  • rate this
    +5

    Comment number 143.

    A lack of any bold ideas or leadership. In 1945 Britain started building 450,000 houses, if we did that again (council houses) the cost of housing would drop, the construction and associated industries revive and we would be the envy of the world. But that takes courage, vision and the sort of steely backbone missing in this government who are wedded to weak plattitudees to their party faithful.

  • rate this
    +6

    Comment number 142.

    As Jaggers says in Great Expectations - look at the evidence -
    this Chancellor is a failure a politician with no experience of business and commerce proper jobs are created on the back of confidence and this Chancellorship is one of the worst that this Nation has had to endure.

  • rate this
    +2

    Comment number 141.

    What is the purpose and meaning of the 1.6 billion roll back granted to the MOD? Is it just more slight of hand?

  • rate this
    +7

    Comment number 140.

    132. blitzkrieg11

    Try Googling some info. I'm far, far, far from being an economist but even I could understand why national budget being compared to a family budget is a politician's trick, and one Cameron has used over and over again to justify cutbacks.

  • rate this
    0

    Comment number 139.

    No136 KM,
    Do you realise that your superb analysis and level of understanding, will be rather too much for the thicko's. I wonder if Rupert is now giving the paper away free of charge.

  • rate this
    +2

    Comment number 138.

    @131.grumpysleepless

    PFI was started in the 90's under Major and are continuing under this government to rebuild dilapidated schools.

  • rate this
    +1

    Comment number 137.

    No134mt,
    You have noticed the coordination.
    Can you remember the 18 standing ovations orchestrated by 'Dave the Dummy' and 'Pasty George' for 'the quiet man' and dynamic leader of the 'nasty party' old Smithy at the party conference.
    He was gone within a few days.
    Mickey Fabricant as leader is their only chance in 2015.

  • rate this
    +8

    Comment number 136.

    @132.blitzkrieg11

    Macroeconomics can't be compared to household budgets. Households can't create money like the BoE, can't hugely change GDP individually. Increasing GDP brings in more money for Govt, households have to rely on pay increases. Households borrowing will pay inflated bank interest, Govt pay at low rates. Every £1 borrowed and invested in infrastructure creates £1.60 in extra GDP.

  • rate this
    +4

    Comment number 135.

    No132 Blitz,
    Simplistic nonsense.
    If FDR had taken your advice the US would still be dealing with the 1930's Great Depression.
    Have you been advising 'Pasty George'
    Who was the adviser to 'Green Shoots' Lamont?

  • rate this
    +3

    Comment number 134.

    Intriguing comments, I wonder if Conservative Central Office have been at work. Right leaning comments highest rated and lowest rated are left leaning!
    The true quality and mark of any society is the way that it treats its weakest and most vulnerable people. And so I ask......Where is the love, when the poorest are made to pay for something they did not create. Culpability rests solely with banks.

  • Comment number 133.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this
    -8

    Comment number 132.

    Say you earn £1000 a month but your expenses are £1200 - the Deficit. Plus, say you owe £10,000 - the Debt. What to do? Borrow more? Pay off less? Borrowing more means more debt; paying off less means interest payments and debt both increase. That is the UK's situation in a nutshell. Labour say spend more and borrow more, and end up even deeper in the mire. Labour! What a laugh they are.

  • rate this
    -2

    Comment number 131.

    Just remember that Ed Balls has saddled hospitals and schools with massive debt for generations,with his brainwave of PFI,S.Frightening

  • rate this
    +3

    Comment number 130.

    120.LUCKYBOY
    "1 example of why sometimes work doesnt pay.I know someone.who earns about £850 net a month for a small firm."
    -
    This is meaningless if we don't know the guy's hours and skill level.
    Or if his employer is an unqualified inefficient small businessman driving a BMW and taking foreign holidays at your friend's expense.

  • rate this
    +15

    Comment number 129.

    I'm against the so called "Help to Buy" scheme which doesn't help first time buyers at all.

    All it will do is cause house prices to rise, and First Time Buyers will be given a bigger mortgage to compensate.

    Instead Osborne should have given tax breaks to the construction industry and given relief to those in -ve equity. The last thing this country needs is a debt fuelled house price bubble.

  • rate this
    0

    Comment number 128.

    99.sscsjone
    .. The government is still running up a deficit and is pandering to large businesses ....the combination of low interest rates and a lack of investment in large infrastructure projects will lead to stagflation of the economy Japanese style.
    =
    http://www.heritage.org/research/reports/2008/12/learning-from-japan-infrastructure-spending-wont-boost-the-economy

  • rate this
    +6

    Comment number 127.

    Evidence of another campaign to fix HYS. Genuine comments are those which have been lowest rated.

    One needs to pinch oneself to realise that annual borrowing and the national debt are still going up in the third and fourth years of a new government.

  • rate this
    -2

    Comment number 126.

    Budget we deserve?

    From 'politics we deserve'?

    'Average' will vary. Little with Equal Partnership, no material conflict of interest, 'reasonable expectation' of any at random, free to take best advice

    With rigid inequality, paradoxically unstable, dictators grow old, lines fail, badly

    Chaotic inequality, default inheritance, 'leadership' unstable as events, any minute 'disaster', Mammon OK?

  • rate this
    -5

    Comment number 125.

    I believe its a +ve budget and good for the working class community.
    Also people who criticise him, should know the mess UK is in. We are in debt of £1.4 Trillion !! If I'm as a person in debt, my view is to cut my expense and not to borrow more though its cheap. As simple as that.

  • rate this
    +1

    Comment number 124.

    Extension of the CGT holiday, abolition of stamp duty on shares, a further reduction of corporation tax, amidst further swingeing cuts to public services.

    It is surely mere coincidence that Gideon and his chums all benefit from the tax cuts but are shielded from the spending cuts?

 

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