You can always tell when a politician’s in a corner – the lie rate starts to rise ominously. There can be few budgets ever (even Gordon Brown included) so full of misrepresentation, deliberate deception, fantasy enumeration, misleading claims, or downright twisting of the truth. The Enron accountants must have welcomed one of their own.
We were regaled with the triumphant claim that “We’re on the right track”. To where? Not to growth – it’s admitted there’s no hope of a recovery before late 2014-5, and who really believes it’s likely even then? Not to steadily falling public debt – it’s actually rising once the distorting one-offs are stripped out. Only an Osborne would claim otherwise by including in his calculations such extraneous and ephemeral items as the sale of 4G licences, the absorption of the Royal Mail pension fund, and the seizing of the serendipitous gains from the QE gilt sales. All of these distract from the true picture, which is unabashedly downwards.
Then we were told with unblinking shamelessness that “the economy is healing”. The evidence for this was the growth forecasts obligingly provided by the Treasury’s own OBR. They rise triumphantly from -0.1% this year to 1.2% next year, then in quick succession 2.0%, 2.3%, 2.7%, 2.8%.
Does anybody think these are worth the paper they’re written on? That anything 5 years out is remotely knowable? Just take 1 year out. His growth prediction for 2013 is now 1.2%; in his budget in March this year it was 2% and in his 2010 budget 2.8%. Since all Osborne’s earlier predictions have turned out without exception wide of the mark, and always of course on the wildly optimistic side, why should anyone have the slightest faith in his latest claims?
Most significantly, the rating agencies don’t believe him. One of them announced immediately after the Autumn Statement that Britain could well lose its triple-A status which has always been Osborne’s totem. It’s not only the Chancellor’s patent dishonesty over the public finances that disturbs his financial masters, it’s the unwaveringly awful prospect of austerity stretching as far as the eye can see without let-up. And this is really the central issue.
Whilst this 2012 budget mark II was really a brazen distraction by trying to pretend that the situation was not as disastrous as everyone knows it to be, it almost entirely ignored the one critical element the economy is crying out for – a major stimulus to demand. Reducing Corporation Tax to 21% (which as we know most big companies don’t pay anyway) isn’t going to make a shred of difference to investment when the FTSE-100 is already sitting on a £800bn stockpile of cash. On the other hand squeezing the poorest by cutting benefit benefit increases to below the rate of inflation really will reduce demand, including particularly for the low-paid in work who will take 60% of the brunt.