This is only the second budget of the new regime, with the main financial statement now in the autumn and what used to be the spring budget relegated to a minor role.
In fact, given Brexit uncertainty, I wonder whether this financial year we might revert to the traditional ranking. By the spring, for good or ill, we should know what sort of Brexit we are headed for – and when. That may be the time for significant measures. Despite the proximity to November 5, I wouldn’t expect many fireworks.
Until recently, it seemed that the Chancellor was up against it as the Prime Minister made pledge after pledge, most notably “giving” the NHS an extra £20bn a year by 2023/24. But, for once, the Office for Budget Responsibility (OBR) has ridden to the rescue. It is set to acknowledge that its latest forecast for this year’s borrowing was too pessimistic by about £13bn.
Assuming that it carries this improvement through to subsequent years, this provides the bulk of the £20bn for the NHS. In any case, in order to meet his objective of bringing the deficit below 2pc in 2020/21, the Chancellor had a fair bit in hand. Indeed, the deficit this year will probably be only 1.2pc of GDP.
Still, much depends on the economic forecast. Surprise, surprise, the OBR’s most recent forecast for next year is pretty pessimistic – growth of only 1.3pc. And I doubt that it will increase this figure by more than a tad in today’s documents. Moreover, pessimistic forecasts for future years will probably leave the Chancellor needing to cut spending or raise revenue to meet his fiscal objective of eliminating the deficit altogether by the mid-2020s.
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