Analysis: Chancellor may regret plundering pensioners

The first is whether this extensively-trailed package does anything to promote demand in the UK economy and boost flagging growth. The second is whether, in what it gives and what it takes away, this Budget can also demonstrate, beyond its claims to “reward work” and “unashamedly back business”, that we are all still in this together.

So far, the UK’s journey back from financial crisis and recession has lagged well behind many of our main competitors. Output here is still well below its pre-crash peak. Will one of the most competitive corporate tax rates in the developed world by 2014 and next year’s reduction in the top 50p personal tax rate by 5p unleash an enterprise revolution? The Office for Budget Responsibility doesn’t seem to think so.

It has nudged up its forecast for growth this year from 0.7 per cent to 0.8 per cent, but lowered next year’s from 2.1 per cent to 2 per cent. Companies are supposed to be awash with cash, just waiting for the right signals to launch a new investment spree. But, if that’s what the Chancellor is banking on, the OBR has news for him.

Worried about continued fragility in the eurozone and fresh spikes in the price of oil, the OBR thinks recovery in business investment this time around will prove much weaker than after the recession of the early 1990s. As recently as November, it thought business investment would grow by 7.7 per cent this year. Now it thinks we’ll be lucky to see 0.7 per cent. Forecast growth of 8.9 per cent in such investment for 2013 has similarly been revised down to 6.4 per cent.

Even if a double-dip recession is avoided, recovery could, it seems, be a long, slow haul.

And for all Mr Osborne’s unwavering determination to deal with Britain’s record debts, long-term austerity is not the easiest platform from which to hold a fractious coalition together or, indeed, engineer victory in 2015, even for a politician of the Chancellor’s well-honed wiles.

Then there’s the Osborne claim that, “together, the British people will share in the effort and share the rewards”.

That narrative was unravelling even before he sat down. And, in the one major unleaked strand of his entire Budget, the victims turn out to be pensioners. It’s pay-back time for those earlier giveaways, like free bus travel.

Now, in the name of simplifying the tax system, the Chancellor is taking back in excess of £3 billion over four years from the over-65s by progressively eliminating their additional age-related personal allowances.

It was the biggest single hit in yesterday’s entire Budget package. Twice as big, over the period, as the proceeds of the increased bank levy.

The Treasury is trying to argue that, because of the big rise in the basic personal allowance, no pensioner will be worse off in cash terms. But that £3bn-plus hit is right there in the Budget arithmetic.

If rewarding work, especially where it comes with a six-figure salary, is to be paid for, in part, by plundering retirement incomes, this could prove a battle-too-far for even George Osborne.