There was no clear theme about growth from the Chancellor today. There is no quick fix for government on growth but it can set the conditions for it. Few if any Chancellors seem prepared to make the radical changes that might be necessary to help restructure the UK economy. The Plan for Growth is 131 pages long – we must hope the content justifies the length.
Labour should find the government vulnerable on the big picture on growth and also on the impact of the spending cuts. However, longer-term we need to be thinking about what the issues will be looking ahead, in three or four years’ time too.
14.00 Stephen’s Verdict: The OBR forecasts that unemployment will rise from 8% now to 8.3% by the second quarter of 2011. It revises up the world growth forecasts while revising UK forecasts down. UK growth is downgraded for 2011 and 2012 and revised up slightly for 2014 and 2015.
13.46 Stephen’s Verdict: Ed Miliband is right to focus on the fact that the growth outlook has been revised downwards and link it to the human cost.
That was a key problem with the Budget speech – it didn’t really link the measures announced with what is actually happening in the economy.
Is the government harking back to 1980s style Thatcherism or 1990s style policies? Labour must make sure it doesn’t respond by harking back to 1970s solutions – good this isn’t happening.
13.44 @BillEstersonMP what support for families? young people? small business? people about to lose their jobs? precious little
13.42 @ftwestminster Apparently justice secretary Ken Clarke was asleep during #budget11
13.41 @Jason_Prince At last, Milliband is coming out fighting. About time. Very good performance from Ed.
13.39 RT @AJogee: ‘Hurting but isn’t working’, how right Ed Miliband is #budget11
13.37 Stephen’s Verdict: Overall first impressions of Osborne’s speech: there’s plenty of food for thought but it’s what was not mentioned that is important too. The next financial year is about to see severe spending cuts. What measures will there be to help those who find themselves out of work as a result? Moreover the context is an economy in which the recovery appears to be faltering. If the much-trumpeted growth plan is to amount to much, there seems to be little evidence of that in the Chancellor’s speech.
13.37 @JohnRentoul I remember the original of this line from Brown in 1988>> Ed M: “It’s not the wrong type of snow, it’s the wrong type of Chancellor.”
13.37 @saramojtehed: Miliband: they shout and jeer as unemployment reaches a 17 year high. what more do youe expect from the party opposite? #budget11
13.36 @catch21p: @Ed_Miliband sounding very confident & passionate #budget11 We need to “grow, grow, grow”
13.36 @RichardAngell ‘Growth down – it didn’t happy by chance but by choice’ says @Ed_Miliba���nd #budget11
13.34 Stephen’s Verdict: Responding to the Budget speech is one of the hardest tasks for an Opposition leader. You need to think quickly to adapt your prepared remarks but you do not have the advantage of having studied the actual figures. You may have only one quote that makes it to the evening news.
1334 @RichardAngell Our leader, @Ed_miliband come out fighting ‘Judge you we will’ #goEd #budget11
13.30 Stephen’s Verdict: Fuel duties are to be cut via what looks like a fiscally neutral fair fuel stabiliser – taxing oil companies in the North Sea more when oil prices are high.
The oil price has risen from around $70 per barrel last summer to around $115 now. The OBR doesn’t think this will boost inflation much given its forecast for inflation next year is 2.5%. It might hit growth of course – as people spend more on fuel they may spend less on other things and companies find their costs increase. There is a risk the opposite happens and prices overall increase further. A key unknown for policy-makers.
13.30 @mbeevor Channel 4’s @krishgm gets it spot on: “back to traditional budget patterns”. It is Ken Clarke all over again.
13.29 @tobyhelm #budget.here we go.. fuel. New fair fuel stabiliser and cut of one pence. This is the headline he wants.
13.28 @robflellomp Glad govt taking some action on fuel prices but NOT a stabilisers!
13.28 @johannhari Osborne’s claims our current debt is freakishly high are just false. As a % of GDP it has been higher for 200 of the past 250 years #budget
13.26 @seandilley Chancellor rejects Labour’s suggestion of illegal different rate of VAT for fuel apparently
13.25 @paulwaugh Osborne targets not Mondeo Man but Ford Focus Man. Brings whole new meaning to focus groups… #budget
13.25 @edcox_ippr Good news on pan-Northern rail improvements … but small beer compared to crossrail investment … roll on Liverpool-Newcastle HSR !!
13.24 @RichardJMurphy Tax avoidance – £14bn lost to avoidance – bigger than ever admitted before – and much nearer to my estimate of £25bn #budget2011
13.23 @GeorgeEaton Rise in personal allowance worth £326, says Osborne. But VAT rise will cost each adult £350. #Budget
13.21 Sunder Katwala: Today’s tax threshold change is worth just £5 a year to somebody working hard and bringing in £7500 a year.
13.21 @abelardinelli £450 RT @BevaniteEllie: Freeze will “save a family £72 a year”. And how much will VAT rise cost them? They try to disguise impact. They cant
13.20 @caitlinmoran Osbourne: “We will encourage rich people to give more”. I know a brilliant way to do that – TAXATION!!!!!!
13.18 13.18 @juliandobson: Apprenticeships – Future Jobs Fund by another name in response to rocketing youth unemployment? #budget11
13.17 @StellaCreasyRight that inheritance tax changes won’t benefit the deceased but their families will from lowered rate – guess who leaves the most…
13.17 @hmtreasury: Chancellor: Gift Aid benefit limits to increase from £500 to £2500 #budget11 #budget
13.17 @EdMPress As well as growth down this year and next year borrowing up by £44.5billion
13.17 @TribuneMagazine Funny how Osborne talks about art donations to ‘our nation’, but feels so different about its public services…
13.16 @gabyhinsliff big issue i can see with linking retirement age to longevity is *nerd warning* what abt MORBIDITY? ie how ill you are at end of life…
13.15 @kittyussher This means that there will be a new safety-net pension for people who don’t build their own pension in the post-N world
13.14 @FullyInvested: #budget11 GO: John Hutton report on pension benefit will be accepted as basis for consultation with public sector unions & workers. MPs too.
13.12 @gabyhinsliff hang on state pension age to rise automatically in line with longevity? it ain’t boring any more. that’s HUGE #budget
13.12 Stephen’s Verdict The (Labour) idea of a Green Investment Bank is a good one. It should be commercial in operation and sit wtihin a context of stable economic incentives aimed at rewarding low carbon solutions. It can borrow to invest (there was a debate about whether there would be a green bank or a green fund) but conditional on UK public sector debt position.
13.11 RT @WhichMoney: Technical colleges to offer vocational training, in a bid to make British workforce more competitive. 24 new colleges to be funded #budget11
13.10 @MRUJOldfield Polytechnics are coming back #bbcbudget
13.10 Sunder Katwala: The £2.5 billion pupil “premium” does not exist. funding to be cut for 80%+ of schools cos recycled from existing budgets. Coalition Agreement promised “additional” funds. Promise broken.
13.08 @greglovelluk: So the GIB is not a bank until 2015/16 #budget11
13.06 Stephen’s Verdict: These announcements designed to encourage company investment and research illustrate my point – they are important for those companies affected but what matters most is a whole economy approach to promoting enterprise.
13.05 @wdjstraw: Work Foundation have pretty comprehensively dismissed the impact of Enterprise Zones http://bit.ly/gI3wkp
13.05 @ken4london: K: Did Osborne just say he would tackle tax evasion – and then say anti-money laundering rules would be eased? #budget11
13.05 @BBCLauraK 21 enterprise zones – fast broadband + rate discounts – local councils will be able to keep rates for 25 years – only in England #BBCBudget
13.04 Kitty’s Verdict: This is feeling good for business, but it will take time for this to feed through to the growth figures. It doesn’t do much for households facing lower wages and job cuts this year
13.01 @kieronam Manufacturing growing at a record rate?? Yes, from a low post-crisis base. And that is despite anything the Government has done #budget11
12.59 @MirrorJames Oh dear – George Osborne’s caught the iDS frog #budget11.
12.58 @j_freedland: Laughter as Osborne dares claim “we are all in this together”. Funny given a budget that lowers corp tax and promises no shocks for nondoms
12.58 @marcusaroberts: Osborne setting up abolition of 50p rate for Tory 2015 manifesto
12.58 @ben_duckworth And the ‘we’re all in this together’ line got loud hoot from Labour benches #budget11
12.56 Sunder Katwala: Abolition of dual discrimination rules. This meant that, eg a 55 year old woman BBC presenter unfairly dismissed because of combination of age and gender discrimination could bring a claim involving both, instead of having to choose between them. How this is fair or saves a lot of cash is difficult to see
12.56 Stephen’s Verdict: Well-flagged review of the way income tax and national insurance is collected. Osborne says he supports the contributory principle. Should that become the backbone of a future enabling state along lines Will Hutton has suggested?
The extra cut to Corporation tax is designed to show the UK is competitive (it’s right to see the bank levy is adjusted to take that into account). One of the issues Ireland has found is that it got itself into a corporation tax competition to the extent that it was difficult to consider raising the tax. It’s important government has sustainable sources of revenue. The best measure for business really is a stable simple tax system so they can plan their investment programmes with some degree of certainty.
12.53 Kitty’s Verdict: Whatever we think of bankers as people, it is true that financial services is one of the main sectors where we can attract international investment: then we slap another random tax on it? This is politics, not economics
12.53 @markfergusonuk VAT at 20%, while Corporation tax slashed.
12.51 @kittyussher Lowering corporation tax is always welcome. But firms wont make profits if people are too spooked to buy things
12.51 RT @spiller2: Bank levy to be adjusted upwards to offset drop in Corporation tax. #budget11 #UK
12.49 @iandunt Osborne seemingly unaware of irony. Promising to ‘ask most of those who can afford the most’ while lowering corporation tax. #budget11
12.48 @ACCANews: #Budget11 Osborne will consult on merging the NI and income tax in order to simplify them
12.47 @WhichMoney: Gideon is trending on Twitter. For those who are wondering why, this is because it’s Osborne’s ‘real’ name… #budget11
12.46 Stephen’s Verdict: No surprise either that OBR confirms deficit reduction on track within the Chancellor’s new rules (there was room there for movement in any event and higher growth forecast later in the forecast period helps).
The structural deficit forecast for next year is unaffected – in other words this seems to mean the OBR is not changing substantially its view of the impact of the financial crisis and recession on the UK’s productive potential. Will need to see the figures later.
12.44 @c_crampton: Private sector must pick up the slack from public sector, Osborne says. Yes, but how do you make that happen? #budget11
12.43 @neilolivier: Unemployment up, growth down, massive inflation. Osborne’s idea of stability! Don’t ever offer to hold a ladder for me George! #budget11
12.43: @DarrellGoodliff: So, the first act of the ‘Growth Budget’ is to report downgraded growth projections – Great work George! #Budget11 #Irony
12.42 @sarahwelfare: As the FT said today, the OBR has no evidence that growth will be higher in 2013/14 but “it likes to assume good news follows bad” #budget11
12.42 @WhichMoney: Inflation is expected to stay at between 4 and 5% in 2011, Osborne says. The inflation target will remain at 2% (CPI), however. #budget11
12.42 Kitty’s Verdict: See how the Chancellor switches quickly from the bad growth and inflation figures to the serious stuff of Libya and Japan…
12.42 Stephen’s Verdict: The UK is not comparable with Greece, Portugal, or Ireland. Ten year gilt yields are around the average for the past two years.
No surprise that 2011 growth forecast downgraded (to 1.7% from 2.1%) and again no surprise that the OBR has revised up later years, from 2013 onwards. The rise in commodity prices – especially oil and food – creates serious dilemmas for finance ministers and central banks. Will they prove inflationary or ultimately deflationary?
12.42 RT @WhichMoney: Inflation is expected to stay at between 4 and 5% in 2011, Osborne says. The inflation target will remain at 2% (CPI), however. #budget11
12.41 @kittyussher It seems clear that there was an unexpected fall in consumer confidence in the second half of last year, which is slowing growth now
12.41 @kittyussher As the FT said this morning, the Office of Budget Responsibility has no way of knowing what growth will be beyond a couple of years
12.40 RT @mjaffer: Osborne says UK rates are down becuase we cut spending: US did not cut, and theirs are down too #budget11 #bbcbudget
12.40 RT @Moneywiseonline: That figure is down from 2.1% #budget11
12.39 RT @NobleFrancis: #Budget11 Chancellor : revision down of forecasts of GDP by OBR to 1.7% for 2011
12.38 RT @WhichMoney: Here are the OBR’s predictions for economic growth: 2011 – 1.7% (down from original prediction). Inflation blamed. #budget11
12.38 @Jos21 Chancellor admits he has put the economy into reverse…..no sorry, he was making it up ….. #budget
12.37 @stellacreasy In the budget listening to George osbourne saying he cares about families – will be interesting to hear how he squares that with his plans..
12.36 @ben_duckworth Budget for making things, not making things up. Early soundbite from Osborne #budget11
12.36 @kittyussher The tax rises have already been announced; that’s why this budget can be fiscally neutral
12.35 @psbook Osbourne: “This is not a tax raising budget” #budget11
12.33 Stephen’s Verdict It will be interesting to see if this Budget produces any surprises, given the newsflow we’ve seen on it over the past few days. The Chancellor has little room for flexibility within the constraints he has set himself, yet in the last quarter UK growth was negative even without the snowfall. While Osborne will have some things he wants to highlight in his speech, the real interest of course will be in the documents which will be released when he sits down. It will be interesting to see how the Office for Budget Responsibility has changed its forecasts for growth and for the budget deficit.
“the march of the makers” or April fools day ? (“fuel in the tank of Britain” what are they going to use? breakfast cereal?)