THE catastrophic handling of last year’s Budget still haunts the Chancellor. So much had been deliberately leaked beforehand that by the time George Osborne got to his feet in the Commons, only bad news in the form of granny taxes and raids on pasties remained.
It may be the case, therefore, that the radio silence prior to this year’s Budget – to be delivered next week – reflects the desire in both Tory and Lib Dem camps not to repeat the same mistakes. More likely, however, is that this time round, there isn’t an awful lot to say.
Rarely has a Budget arrived with such a deep economic crisis as its backdrop and such small expectations as to the Chancellor’s plans. There may be extra spending to carry out some repairs to the road network, urged by the CBI. Or a change in the rules to allow the Bank of England to put inflation targets to one side. There will be the usual rabbit in the hat – such as further cuts to corporation tax, or greater tax allowances for the low paid. But this is not likely to be, in the words of the impatient Tory MPs who are watching their majorities crumble, “a game-changer”.
Prime Minister David Cameron and Osborne are, instead, sticking by their No42 bus strategy. They are aware that the economic recovery they intended to hop on board about now has broken down. Not to worry, though. There they sit at the bus stop, peering down the road, eagerly expectant that another will trundle over the horizon any minute …
Even if it does appear, it is not likely to be the super-charged juggernaut that can resurrect high rates of growth before the next general election. Hence the calls this week from Liam Fox, on the right, and Vince Cable, on the left, to hurry things along. The question is whether any of these alternative plans will really make much difference.
Last week in Scotland, largely unnoticed amid the independence referendum frenzy, economists at the Fraser of Allander Institute published their latest outlook. It pointed to the difficulty of prodding the economy onwards at a time when domestic and foreign demand is so slack. The institute favours a massive Keynesian infrastructure investment plan to revive the UK. Not going to happen. But the main beacon of hope, it notes, is that the US economy resumes its traditional job of jump-starting the global economy. Without a domestic or foreign boost in demand, it finds little evidence that we are turning from a nation of credit-card consumers to hungry exporters and investors, winning the “global race”.
So what to do? Osborne was bitterly criticised last year when he left his Budget homework the week before the Budget to revel in the glitz of an state visit in Washington. Yet, given the crucial importance of America’s revival in turning things round, he might as well head back there this weekend. Given the helplessness in the mood here, it doesn’t appear we’ll miss him that much.