Now that’s what I call a damp squib. There was very little in today’s PBR that wasn’t trailed over the weekend, and most of the new things were – of course – tax rises that Number 10 was hardly ever going to trumpet. In fact, for all of the pre-report debate over unfunded tax cuts, Brown and Darling have delivered a Budget which represents the worst of all possible worlds – net tax hikes coupled with massive borrowing. The announced tax increases of around £40 billion were more than double the stimulus package of around £20 billion. Whilst national debt could well be tipped over £1 trillion.
Of course, it should normally be little surprise that taxes will be increased later to cover borrowing now. But this is Gordon Brown we’re talking about. It wouldn’t have been past him to use the borrowing to fund an even bigger stimulus package; one that would have pushed this Pre-Budget Report into the tax-cutting bracket – at least so far as surface appearances are concerned. That he didn’t, leads one to suspect that the Treasury won out in the battle of wills that was being reported last week.
All this leaves a great deal of room for the Tories to manoeuvre. Brown’s been banging on about how important a fiscal stimulus is to the economy, and how unfunded tax cuts are the way forward during this downturn. By his own measures, he’s hardly delivered – whilst the “tax bombshell” and the “borrowing binge” are now firmly out in the open. George Osborne did a great job hammering both, particularly when highlighting what the hike in national insurance contributions will mean for this country’s workers. For the first time during this downturn, one senses that the Tory economic message has been given a boost – rather than being overshadowed – by Brown’s disingenuous narrative. Cameron and Osborne now need to seize this opportunity.
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