Daily Archives: March 19, 2014

It wasn’t a “giveaway” Budget – because, as the chancellor admitted – even the greatest upward revision in growth between Budgets in at least 30 years had not given him anything to give away.

The Office of Budget Responsibility’s gloomy view of the UK’s underlying potential has not changed. In its view, the faster than expected growth we have seen – even since December – has merely brought forward the date at which the spare capacity in the economy will be used up. Read more

When an economy enters a prolonged period of lower-than-expected growth, there is bound to be a fight over the spoils. In the UK’s case, George Osborne has decided to prioritise the interests of the older generation, as show in Wednesday’s Budget statement. Politically, that is not surprising. All political parties yearn for the support of the baby-boomers: there are lots of them and they are now of an age where they can reliably be expected to head down to the polling stations to cast their votes.

In truth, Mr Osborne has to confront a stark economic reality. If the Office for Budget Responsibility’s forecasts are anywhere near accurate, the UK economy is condemned to a remarkably weak pace of economic growth in coming years. The OBR’s boffins believe the UK’s unexpected strength last year was cyclical, not structural, and is not yet prepared to proclaim a renaissance in medium-term growth prospects. Read more