Budget - a quick reaction

It's always a risk to give an instant reaction to a budget, so I have some sympathy with the various commentators who are required to say something before they have had the opportunity to actually read through the Treasury documents.  But here goes.

 

It is not possible to determine right away if the Chancellor has managed to convince the 'bond vigilante' demands for further retrenchment.  However, the net impact on the deficit this financial year is unchanged from the projection given before the budget by the Office for Budget Responsibilty (the two are not quite comparable) and its estimate of the deficit (once the spending cuts announced after the election are factored in) is unchanged after the budget.  The changes take effect in subsequent years.  So despite the rhetoric, there is not much of a change this year compared to Alistair Darling's plans, once the surprise improvement in public finances has been included.  Again it's worth repeating - the deficit last year (ie Labour's last tax year) was £23bn less than was predicted in December.  That puts some of the changes into context.

 

The VAT increase has caught the headlines of course.  But there are other moves that should be noted.  Benefits are now going to be increased in line with Consumer Price Index figures not the current Retail Price Index, which is higher.

 

I'm now writing a short piece for Progress, having a look too at what Labour should be saying in response.

 


Stephen Beer, 22/06/2010

 
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