Ewen Stewart of Arden Partners has kindly supplied his note The Budget – Much ado about nothing for publication.
The backdrop to this budget could not be more fascinating: tightening polls and an apparent improving economic position but still within the confines of a fiscal deficit and monetary policy that is literally unprecedented since the Second World War. Darling’s performance yesterday was of a reassuring bank manager but in reality little new was established. The Budget was clever politics but the real economic meat – in terms of a credible plan for tackling the deficit – will need to wait until after the Election.
The Budget was more focused on politics than economics. The tone, at times, was close to a triumphal justification of policy aided by apparent recovery. Growth forecasts were broadly maintained, save for a 0.25% cut to 3.25% growth for 2011. The deficit forecasts were also reduced slightly to £167bn (from £178bn) in 2010/11 and £163bn (from £174bn in 2011/12). HMG sees a rapid reduction in debt thereafter – a point we take issue with.