From scrapping the 50p tax rate to raising the personal allowance, and cutting corporation tax to stamp duty for mansions, this budget was all about political symbols.

On income tax, the chancellor trod a very fine line in providing enough red meat to satisfy his backbenches and enough baubles to keep the Lib Dems on board. The decision to cut the top rate of income tax from 50p to 45p is a case in point. Most observers, me included, expected him to simply scrap the top rate altogether. That is certainly what the Tories wanted and, I suspect, what George Osborne would like to have done.

The 50p top rate has the odd distinction of being popular in opinion polls while being, simultaneously, not the smartest way to tax wealth. That is why the chancellor was at pains to stress that tax avoidance was ‘morally repugnant’ and that the 45p rate would raise only £100m less revenue than the 50p rate. If he can convince the public with this line of argument the 45p rate may well prove an astute piece of politics.

In exchange, the Lib Dems advanced their cause-celèbre with the personal allowance increased to £9,205, and also secured a new rate of stamp duty for mansions. But the hike in stamp duty for mansions from five per cent to seven per cent is a policy that was clearly written on the back of an envelope. Only a couple of thousand £2m+ homes are sold each year so it will affect very few people. Moreover, like all ‘cliff-edge’ taxes it will be easy to avoid. People will simply adjust the purchase price to keep below the £2m threshold. Ultimately, the policy sounds good – although it shares the same flaws as Vince Cable’s mansion tax idea – but will raise peanuts. If anything, it is bad news for Boris Johnson since most £2m properties are in London.

But while Osborne’s budget is a clever piece of short-term politicking, he has again flunked the main tests. His deficit reduction plan has been an unmitigated failure. Even using the Office of Budgetary Responsibility’s optimistic targets, the deficit will be 7.6 per cent in 2013 – a level exceeded only by Greece in the EU. Government borrowing for February was £15bn, nearly double the £8bn forecast. The economy remains stagnant and inflation is likely to remain higher than the growth rate between now and the next election. Most people will be poorer in 2015 than they were in 2010.

The budget is also bad news for every public sector worker living outside London and the south-east. Despite the fact that there is little evidence that nationally agreed public sector wages create problems for the private sector, Osborne is determined to pursue regional pay rates. Any Tory hopes for an electoral breakthrough in the north of England and Wales will be sorely tested by regional pay. For those of us concerned by the OECD’s newly published report ‘Divided we stand’ which revealed that income inequality in Britain is lower only than the likes of the US; Mexico and Chile, the message from Osborne is clear – the gap will get wider.

From 1997-2007 budget day was all about what new rabbits Gordon Brown would pull out of the hat. Brown’s budget speeches were often as much about politics as economics – handing out goodies in the form of income tax cuts, extra money for schools or the NHS. George Osborne follows a similar pattern in that his budget speeches, like Brown’s, are part of his plan to one day take the keys to No 10 from Cameron. But while tomorrow’s headlines will be dominated by scrapping the 50p rate and increasing the personal allowance, no amount of window dressing alters the fact that after two years of the coalition the British economy is stagnant, the debt burden bigger and most people poorer.

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Ben Fox is political adviser to a socialist vice-chair of the economic and monetary affairs committee in the European parliament, and is chair of GMB Brussels. He is writing in a personal capacity.