Budget 2016: How was it for you, dear?

A long awaited Sugar Tax, the compulsory removal of all schools from local authority control and support for the Airbnb economy — anyone would think this series of showy headline-grabbers meant the chancellor had something to hide… And then there were the tax cuts — is this a pre-election giveaway four years from the next general election??? As I mulled these thoughts over this afternoon, and after reading the analysis from journalists such as Paul Mason and the Guardian editorial team, I soon came to realise that both of these suspicions are true.

Firstly, the chancellor really does have something to hide. Buried in that theatrical display of distracting announcements were some pretty sobering figures. Dull, boring figures that he doesn’t want us to dwell on, but they are there all the same. Let’s start with the OBR’s downgraded GDP forecasts:

  • 2016: 2% from 2.4% (-0.4%)
  • 2017: 2.2% from 2.5% (-0.3%)
  • 2018: 2.1% from 2.4% (-0.3%)
  • 2019 + 2020: 2.1% from 2.3% (-0.2%)

Not exactly inspiring. Next up, he’s already managed to miss two of the three targets he set himself less than a year ago. Why would we possibly think his claim to run a £10.4bn surplus by 2019 will come true? Even Andrew Neil seemed to be in shock, saying on Twitter, “Main point that strikes me so far is that forecast for 2019/20 surplus involves £30bn fiscal turnaround in ONE year!!” (emphasis mine).

Source: http://budgetresponsibility.org.uk

As far as I know, he’s missed every fiscal target he’s ever set himself for the last six years — but the tabloid press barely ever mention his track record.

Inflation has also been adjusted down 0.3% more than expected to 0.7%. Aren’t we supposed to be hitting 2% or more? As Paul Mason suggested on Twitter, [with] “growth collapsing but no fiscal stimulus; so over to you Mark Carney…for more QE?” Let’s hope that’s not the plan.

With the economic figures out of the way that he’s keen to hide, this brings me on to my second realisation of the day: maybe George Osborne is preparing for a leadership election, once the dust as settled from the EU referendum? As others have stated today, this budget in the cycle would normally be the time to apply the pain, getting ready for a big giveaway before the 2020 election, so why all of the gifts to the Tort demographics today? Don’t get me wrong — there was pain in there today— public spending is set to be cut by a further £3.5 billion by 2019/20 — on top of all of the other austerity we’re already waiting for. But having missed his own targets, why is he giving money away in another round of tax cuts?

I think the answer is twofold. Firstly, with the EU referendum just a few weeks away, he doesn’t want to piss anyone off. A financially secure and happy electorate a more likely to back his recommendation over Europe. So that’s a given, but the second reason for today’s feelgood budget for Tory voters is that once the referendum is settled, there’s really no way of knowing if Cameron will survive. Succession is actually a much more pressing matter than many realise and Osborne could be making his bid for the leadership within months of the June referendum.

Source: http://www.pwc.co.uk

Finally, I’d just like to say a thing or two about the people that really count — our children and the “next generation” that Osborne seems so keen to do right by. You know, the generation whose parents’ he keeps kicking in the teeth. Let’s remember them properly shall we? The generation where only 28% of 18–32 year olds feel better off than their parents’ generation. Apparently we mustn’t burden the next generation with future government debt — but destroying their schools, cutting their parents’ in-work benefits and saddling them with a small mortgage for going to university — that’s all fine. The hypocrisy and bare-faced audacity of this latest generation of Tories is difficult to fully comprehend. Osborne seems to live in some kind of virtual fantasy land where he’s presiding over a thriving, healthy economy and we’re all reaping the rewards. In reality though, although his mates in The City might be doing very nicely, for most people in Britain today it couldn’t be further from the truth. And if these storm clouds brewing on the horizon do turn into a global recession any time soon, then all I can say is Gold help us all.

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