Wednesday, 24 March 2010

A Do Nothing Budget

I covered budgets as an economist until 1997 but count myself lucky not to have had to examine the entrails of Labour's 15 budgets professionally.

However, there can be no doubt that this budget does less than any budget in living memory. We have a 'do nothing' budget at a time when there has never been a greater need for action to restore confidence in our country.

David Cameron, who was on very strong form, could not have put it better in his response, saying:

"The risk is not in dealing with the deficit now but in not dealing with the deficit now - what we need is a credible plan to deal with the government's debts starting now".

It is bad enough that the government says it will borrow £167bn this year and then boasts that it is only 11.8% of GDP, although I suspect that they are erring on the side of caution and the plan is to announce an undershoot on the 22nd April and present an 11½% deficit as a triumph of Labour economic management!

What is truly shocking is that the government still insouciantly plans to borrow £163bn next year, over 11% of GDP for the second year running.

No wonder the pound is down a cent and a half and gilts are down over a point. The key point everyone needs to understand though is that the market reaction would have been far, far worse, except that they are betting that they will soon have a Conservative government to clean up Labour's mess.

A lot is riding on us and, as a candidate, I will be doing everything I can do over the next six weeks to help put David Cameron in Downing Street, so we can make a start on putting our country back on track.


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