‘No news is good news’ ought to perhaps become the government’s motto – in its bleakest, most pessimistic sense.
While George Osborne’s budget may have unveiled a host of new initiatives, most of these are tinkering – tax-free income is increased to £10,000 a year early – or populist – the price of beer is cut, along with fuel duty. Without meaning to dismiss the importance of such measures, the only policies notably focused towards growth – arguably the top priority in our stagnant economy – are the £3 billion extra on infrastructure (which is itself fed by a cut across Whitehall of 1%, ironically including the Department of Transport), cutting corporation tax to 20% (offset by a rise in the bank levy), and a government mortgage scheme to boost the housing market.
All plausible enough – though the last may raise eyebrows given events that sparked off this crisis – but they are hardly revolutionary. Even the Office for Budget Responsibility (hardly known for its cautious forecasts) has estimated the growth impact of the budget at 0.1%. The aim seems to have been to abandon any hope of actually making a difference, and rather focus on the Tories’ core vote – in the words of one Telegraph commentator: “David Cameron’s dreams of building the big society are over. His hope of victory rests on building the Tory society.”
Unfortunately for the beleaguered PM and his hapless Chancellor, this is almost certainly not the message that will emerge from this afternoon’s speech. Humiliation is no doubt becoming second nature to the coalition, but the budget certainly contained some unwelcome reminders of this. Growth, at a dismal 0.6%, is half that forecast in the Autumn Statement. Unemployment is up by 7,000. The deficit stands at 7.4%, up 0.5% from that predicted. Government debt is set to increase until 2017-18, a full two years after the 2015 target which Osborne declared in 2010. In short, the economy is still languishing in the doldrums: the relentless failure of those supposedly running the country to do anything about it would be funny, were it not for the amount at stake.
However, though – as might well be obvious – I am hardly the chancellor’s greatest fan (which as matters stand is not saying very much) all this is not precisely his fault. While of course there are the familiar – and depressingly true – litanies to be trotted out about how the economic mess is the fault of a) the EU crisis, and b) the previous government (it is worth remembering the deficit stood at 11.2% in 2009-10), these are hardly an answer to the economic woes – just because the rest of the forest is on fire doesn’t mean you’re any safer in your tree.
Rather we should attempt to forget the economy as it stands, and focus rather on our long-term future. Provided we escape the coming nuclear/chemical/environmental/biological apocalypse(s), it seems unlikely in the extreme that a banking crisis – no matter how severe and no matter what short-term costs – is going to annihilate the human race. The pace of innovation has hardly slowed: mobile technology is advancing in leaps, while gene therapies and new medicines improve our longevity and quality of life. Quantum computing may yet provide vastly improved processing power, and new developments in power generation, whether shale gas, offshore wind farms or even safe nuclear plants will end our reliance on Middle Eastern oil. Economies in developing countries around the world are springing to life; even sub-Saharan Africa appears to be moving, however slowly, towards stability, offering vast untapped natural resources for exploitation.
Ultimately, the effect a budget – even one so apparently significant – can have on the course of our economic growth is tiny. Osborne has been lambasted for measures that make no real difference, but the reality is that nothing he could feasibly do can change our situation. The British economy is in the grip of forces larger than even the mightiest states could hope to control – and on the whole they are moving us in the right direction.