Is George Osborne right to look confident after 'mini-Budget'?

"I can tell the House that we are no closer to balancing the books than when we first promised to do it. We are not on course to meet our debt target. We now need to put up taxes and cut spending until at least 2018. We're making progress. We're sticking to our Plan."

Cue Tory MPs shouting "hear, hear" as the chancellor sits down to be congratulated by the prime minister.

Those weren't, of course, his exact words in his Autumn Statement, but they do sum up his grim message.

The politics of today's mini-Budget are very curious. At a time when his critics - and Ed Balls in particular - are able to say "I told you so", George Osborne looked and sounded confident whilst the shadow chancellor looked the reverse.

Here's why the chancellor thinks he got the politics right - and why he may be wrong :

  • The chancellor hailed the fact today that the deficit is still falling and so too borrowing, contrary to most economists (and my) expectations. I'm told that Treasury officials only saw this data a little over a week ago and couldn't believe their luck. It allowed George Osborne to claim that the government is still making progress.
  • He believes that so long as the public perceive the problem with the British economy to be borrowing they will see the government's budget hawks as the solution and Labour as the problem.
  • The government believes its chosen targets for cuts are popular. Beware when they talk of squeezing bureaucrats, benefits and the better off.
  • Alongside that pain he's offered voters some gains - the cancellation of the next planned fuel duty rise and another small income tax cut by an increase in the personal tax allowance.
  • The Treasury's latest attempt to stimulate growth is to cut business taxes and to switch £5 billion from day to day "current" spending to investment or "capital" spending. This has already been welcomed by business.

One of the oldest political clichés of them all is that you shouldn't judge a budget on the day. The reason sayings become cliches is because they are usually true.