Daily Archives: June 22, 2010

There are some real little horrors buried in the fine print of this Budget.

Just take the measure to cut housing benefit by 10 per cent for anyone on the dole for more than a year. Read more

Check out these video interviews with FT experts on key areas of the Budget. Read more

“In the case of cigarettes longer than 8cm (excluding any filter) each additional 3cm (“or part thereof“) is treated as an additional cigarette for the purposes of specific duty calculation. For example a cigarette of 12 cm would be treated as three cigarettes.”

For nine Budgets out of 10, financial markets are not the most important constituency. This is the one in 10 that’s different. Facing the largest fiscal deficit of any European country, barring Ireland, it was hardly hyperbole for George Osborne and Tory spinmeisters to call this an “emergency” Budget (even if Treasury mandarins managed somehow to keep the word off the cover and out of the text of the Red Book itself).

This government’s macro-economic strategy hinges on the successful pursuit of tight fiscal and loose monetary policy: the idea is that a credible roadmap for the public finances will deliver long-term interest rates that are lower for longer, thereby underpinning a recovery. If the coalition government fails in this balancing act, a 1937-style return to recession is hardly fanciful, given the scale of public sector demand that is to be sucked out of the economy.

So far, so good. Since May 5, the day before the general election, yields on the benchmark 10 year gilt have fallen from 3.80 per cent to 3.51 per cent at breakfast time on Budget day. Shortly after George Osborne delivered a somewhat stiffer package of spending cuts and tax rises than markets expected, they dropped even further, at one point dipping below 3.40 per cent. Read more

David Cameron made a passionate speech last autumn where he claimed that it was a scandal that thousands of low-paid workers could only keep a few pence of every pound that they earned. This phenomenon, for the fiscally uninterested, is called a “marginal deduction rate”.

So what is the impact of today’s Budget on these folk? Perhaps alarmingly, people with a marginal deduction rate of over 90 per cent (they keep less than 10p in the pound) is set to nearly double – although not entirey as a result of today. Read more

George Osborne’s team are particularly proud of cooking up this chart.

The gap between the black line and the green line is basically their representation of the BROWN BOOM. Read more

Nick Clegg was apparently obsessed with the chart below, which shows the impact of the Budget measures across the income scale. The coalition have bet the ranch on “progressive austerity” and they think these statistics vindicate the claim that this is a tough but fair fiscal medicine.

The trouble is that this chart showing the spread of pain from the tax rises and benefit cuts is just a snapshot of 2012. It won’t look as fair after that. Read more

Harriet Harman made unemployment the focus of her shrill but effective riposte against the coalition, claiming that tens of thousands of people would lose their jobs as a direct result of the Budget. Her lack of a concrete figure, however, stems from the rather ambiguous picture painted by the Treasury’s Red Book.

If you compare the OBR’s new unemployment forecasts with the June pre-Budget forecasts there is a slight difference but it is not as stark as Harman would have you believe. For the current year, employment, ILO unemployment and the claimant count remain the same. Read more

George Osborne sits down at 13.28 – that’s it, the Budget has been delivered. Now Harriet Harman will respond, but thank you for comments and for joining us.

Jim Pickard, political correspondent: Osborne’s promise to return to “financial prudence”… Could this be a dig at Gordon Brown by any chance? This was in happier days his favourite expression.

Jamie Chisholm, FT Global Markets Commentator: Gilts back to where we started, down 8 basis points at 3.45 per cent. Sterling little changed.

Child element of tax credit to be increased

Matthew Vincent: The chances of exchanging contracts on your second home by 5.30pm today look a bit remote. Best phone your solicitors and give them the hurry up…

Robert Shrimsley, editor of FT.com: Is it my imagination or is George Osbrone saying “coalition government” much more now that he’s got to the nastiest parts.

 Read more

Update: follow our live coverage of the Budget here.

The Westminster blog will host a line-by-line summary of George Osborne’s Budget statement, featuring commentary from FT writers, from 12.30pm (or just before the Chancellor stands up). Jim and Alex will then return to the blog. Read more