PBR 2008 and PBR 2009: a difference which may not make much difference
Peter Hoskin 1:32pm
Yep, it's that time of the year again: the run-up to the Pre-Budget Report, when we hear tales of splits between Number 10 and the Treasury on how they should approach the fiscal mess we're in. According to today's Sunday Telegraph, and going off rumblings on Whitehall, Darling is pushing for a more expansive package of cuts. Whereas Brown – and Ed Balls, natch – would prefer to emphasise all that investment, investment, investment.
In which case, I was tempted to just copy-and-paste a post I wrote last year, on a similar subject, and at almost exactly the same time in the political cycle. Its point was that stories about tension between Brown and Darling could work to undermine Labour's overall economic message. As it happens, that's still the case. And, like then, I still think that the measures in the PBR will hardly match up to the scale of the debt mountain.
But it's worth emphasising one difference between then and now (and between now and the last Budget in April, even). In the intervening period, Brown has – in a mumbling, reluctant kind of way – admitted the need for cuts. And that, by itself, is enough to add a little bit of narrative uncertainty into the mix. It's even got one or two Tories I've spoken to fearful that this PBR could help Labour claw back some lost ground on fiscal sanity.
Previous
Chuck Unsworth
November 29th, 2009 1:50pm Report this comment'Investment'? Crap. When do we see a return on this 'investment'? No-one really believes this to be an 'investment'
Why not call it what it really is - 'spending taxpayers' money'?
For far too long Brown has referred to 'investment'. That is patently a lie. Another Brownie to add to the heap.
Stripey Crocodile
November 29th, 2009 2:16pm Report this comment'this PBR could help Labour claw back some lost ground on fiscal sanity. '
Remind me. When did this Government ever demonstrate any fiscal sanity?
Hawkeye
November 29th, 2009 2:53pm Report this commentChuck Unsworth said: "Why not call it what it really is - 'spending taxpayers' money'?"
Correct. I wonder my Cameron simply does not say that at PMQs. It is a simple message, devasting in its honesty and how can Brown deny it?
Short the UK
November 29th, 2009 3:20pm Report this commentUK Govt 09/10 profit & loss account
Revenue (£ bn):
Income tax - 141
National insurance - 98
VAT - 64
Corporate tax - 35
Excise duties - 44
Business rates - 24
Council tax - 25
Others 67
Total = 498
Spending (£ bn):
Social protection - 189
Health - 119
Education - 88
Economic affairs - 43
Public order and safety - 35
Defence - 38
General public services - 31
Housing/Environment - 29
Debt interest - 28
Other - 72
Total = 672
Deficit (loss) = 174 bn
*This is a conservative estimate.
Our debt interest payments are projected to equal the Education budget as the balance sheet gets hammered. I have yet to find hard data on the balance sheet. In a sane world every household would receive a 12 page annual report from Westminster. Democracy my arse..
Verity
November 29th, 2009 3:52pm Report this commentGordon Brown is looking increasingly deranged in his photos. Are there any rumours about his mental state (I mean, other than that he's a socialist)?
Snowman
November 29th, 2009 4:21pm Report this commentShort the UK @ 3.20:
A minor point: the quantitative easing sucks up debt yielding higher than the newly issued debt. Correct? Should this not help?
If the Treasury were truly innovative they could issue convertible gilts at current yields. The holder of such paper will have the right of swapping it for another issue with say, a 10% higher face value after 5-7 years. The idea here is to lock up the historically low yields at a cost of increasing the Treasury’s capital outlay but only after the country gets over the recession and growth resumes.
Short the UK
November 29th, 2009 4:31pm Report this commentSnowman
The only reason that gilt yields are so low is because the BoE are buying them, this will have to stop at some stage, then Gilts will sell off.
Seemingly the DMO has to sell a trillion pounds of gilts over the next five years and our debt interest payments are forecast, in future years, to be c.88 bn, the same as the education budget.
If the BoE loses control of interest rates we will go to Event Horizon and become the Argentina of the West.
As Jim Rogers said, .“I would urge you to sell any sterling you might have, it’s finished. I hate to say it, but I would not put any money in the U.K.”
Neil McEvoy
November 29th, 2009 8:42pm Report this commentPlease stop using the word "natch".
2trueblue
November 29th, 2009 11:55pm Report this commentYou have to ask, what do Brown and Balls mean by 'investment'? So far the returns are grim.
Poor old Darling, he tires but he is well and truely stuck.
Naomi Muse
November 30th, 2009 5:39am Report this commentSo, Darling Alistair and Broon gasp and clench their jaws so as not to admit too much at any one time. It is clear that GBroon stops AD from coming clean on it all.
The truth will out in the end.
They look remarkably like Punch and Judy in this little picture too and have certainly learned the lingo 'That's the way to do it!'
An election now might save our triple A rating.
I understand banking real estate in other places is being viewed by potential movers from the City as we speak.
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