Tuesday, 27 March 2012

Mr Osborne's empty budget box


I know I've been silent for a week or so. I've had lots on, as you'll know if you follow me on Twitter as @gsoh31.

But first things first: I wouldn't have bothered with George Osborne's third Budget (above). A press release would have sufficed really, because it was a huge non-event.

What did it involve? Basically, a cut in the basic rate of tax, especially for low earners, by the freezing of thresholds. And a cut in the top rate of tax paid only by the very, very few Britons who earn more than £150,000 a year, justified by the highly dubious statement that it didn't raise any money. Paid for by what, on the face of it, is a politically insane 'granny tax' which, though it doesn't raise much money, has raised a hue and cry on the Right as well as the Left by freezing personal allowances for pensioners. Coupled with 'dinnergate' - rich people's apparent ability to buy dinner with the Chancellor and Prime Minister - it's sent all the wrong signals about who the Conservative Party stands for. Their retreat in the polls has been immediate and in some cases startling, and it's all a gift to Lib Dems who can whisper that they would have done it all differently.

And, er, that's it. No movement on 'Plan A' - the Kamikaze flight into the side of a mountain that the Government has been set on since day one. No admission of total failure to get the deficit down. No overall movement at all, actually. The Chancellor has lashed himself to the mast. That's it until 2015. Come back then if you want a different macroeconomic policy.

It was a tinkerer's mid-term budget, that reminds me strongly of James Callaghan's 'steady as she goes' Budget in the spring of 1967 - a statement that was followed by financial crisis and devaluation. That won't happen this time. The economy will probably avoid an outright recession. Indeed, it's probably growing already. But it will be slow, slow, slow and painful going - accompanied by yet another set of public sectors cuts, on top of what's been announced already.

We'll emerge into watery sunlight eventually. But it'll be a long march.

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