If you want to take away two main points from today’s Budget they are these:
1] Borrowing is about to go through the roof. The figure for public sector net borrowing (PSNB) was just 2.4 per cent in 2007/8. It will have jumped to a punitive 12.4 per cent this year, before easing back to 11.9 per cent, 9.1 per cent, 7.2 per cent and (by 2013-14) 5. 5 per cent.
For this to take place, however, you have to believe some pretty optimistic forecasts from the chancellor.
2] Alistair Darling is predicting that consumer demand will return to pre-boom levels within a couple of years. And that GDP growth will be (after a 3.5 per cent fall this year) 1.25 per cent in 2010/11, compared to independent forecasts of 0.3 per cent. From then on the government expects annual growth of 3.5 per cent, a much more buoyant prediction than the Bank of England’s 2. 5 per cent.
Jim Pickard
Kiran Stacey