Thursday, March 24, 2011

 

Much Sound and Fury b ut There's Little in the Budget Apart from Political Gimmicks


'They now ring their bells, but they will soon wring their hands', is a quote from Sir Robert Walpole(whose excellent biography by Edward Pearce I am currently reading), came to mind when I heard Tory MPs baying their approval at George Osborne's budget speech. Certainly it was delivered with chutzpah, if not elan, confirming his emergence as a dominant Chancellor and a heavyweight politician. But even a cursory examination of what he has done reveals the tiny room for manoeuvre he has and the size of gamble he continues to make. He agreed with James Naughtie on Today that this was a 'neutral' budget which gave only scraps away.

The concession on petrol was produced in a Gordon like surprise at the end of his speech on the presumed political assumption that voters don't think much of oil companies. They don't but they think even less of bankers who escaped, yet again, almost scot=free from the annual budgeting process. Osborne has gambled everything on his deficit reduction plan coming off by 2015 but already the consequences of his cuts are evident in the economic statistics. Growth predictions have been scaled down for this year from 2.1% to 1.7%. In his best speech I have yet heard since he became leader, Ed Miliband, laid some telling blows:

But one fact says it all. Growth down last year, this year and next year. It is the same old Tories. It's hurting but it isn't working. What did he say last year about growth? Judge me on the figures. Well judge him we will Every time he comes to this House, growth is downgraded. Last June, 2011 growth down from 2.6% to 2.3%. In November, down again. In January what did the Prime Minister say? His three priorities for this year were growth, growth, growth And what happened? Growth is down, down, down.

In addition to that, of course, inflation is up, up up and so is unemployment.The Labour leader pressed on to assert the cuts had been 'too deep too fast'. It is impossible to predict if George has got it right but it's clear he doesn't have a clue either, and offers us mere promises of solutions by 2015. Interestingly the confirmation of a fixed term election until that year, is currently before the Lords and it is clear he needs this time for his gamble to have any chance. If reduced to four years, as Labour peers are seeking, he might be left high and dry in the polls. Tim Montgomerie of Conservatrive Home, predicted on Today yesterday that the Tories, 10% behind in the polls now, might fall as low as 20% once the cuts really bite. That year will be crucial. Some political gamble, but it's the economic one which will affect all us us and for some time.

The Chancellor made some measures to inspire growth but they were awfully reminiscent of most governments failed initiatives over the last two decades. he held out a Germany like rebalancing of the economy- something which Labour should have sought to do when they were kow-towing to the City- but such a process will take more than 5 years, more like 25.

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