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The ‘unavoidable’ Budget?

Ben Chu

  

Osbourne budget pic 150x150 The unavoidable Budget?

Further and faster

George Osborne is clearly intent on pushing the “unavoidable” line for this Budget. He’s using it again this morning. The Chancellor understands political PR. He knows that messages must be clear and often repeated to cut through. But is the message in this case actually true? 

Here’s the Budget red book (p1)quoting the verdict of the Office for Budget Responsibility on the consequences of the previous government’s existing deficit reduction plans: 

“The structural deficit would be 2.8 per cent of GDP in 2014-15, while the structural current deficit would be 1.6 per cent.” 

The OBR says the structural deficit in 2009-10 is 8.7 per cent of GDP. So, according to the OBR’s projections, Labour’s pencilled in tax and spending plans would have removed 68 per cent  of the structural deficit by the end of the parliament. 

Here’s what the Tories promised in their manifesto (p5): We will safeguard Britain’s credit rating with a credible plan to eliminate the bulk of the structural deficit over a Parliament.”

But it turns out there was already a plan to eliminate the bulk of the structural deficit (I think 68 per cent can reasonably be defined as the bulk). And Labour had outlined it. What Mr Osborne brought forward yesterday was a plan to eliminate the entire structural deficit by 2014-15. He is going further and faster than the Tories promised in even their own manifesto.

Mr Osborne could argue that this is the right policy for Britain. But to present it as “unavoidable” is nonsense. The severe fiscal consolidation being forced by the markets on the Greek and Spanish governments is “unavoidable”. There is no reason to believe that the bond vigilantes would have moved on Britain if they saw a 2.8 per cent structural deficit projected for five years time. Mr Osborne’s decision to cut faster and further than Labour is not “unavoidable”. It is a choice. And it is only right that he, his party, and his Liberal Democrat coalition partners be held responsible for that choice.

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