Employment at a new high, borrowing costs at a record low. So who’s afraid of Brexit?

The Chancellor certainly will have plenty to boast about in his next Budget. Today’s figures show an employment rate of 74.1pc, the highest ever recorded in Britain – better than Nigel Lawson’s record, better than anyone’s. Tax cuts and welfare reform have proved a potent combination.

This makes it harder for Osborne to sustain his narrative about a scary “cocktail of risk”, part of the general strategy of keeping voters fearful ahead of the EU referendum. With record employment and zero inflation – a striking contrast with the Eurozone – things really could be a lot worse. Against such a backdrop, voters might well wonder what else Britain could achieve by striking out on its own.

All of this success has helped make British government debt seem relatively safe. According to the FT, the Chancellor has just borrowed £2.75bn at an average interest rate of 1.59 pc – a record low.

If the market was genuinely panicked about the prospect of  Brexit – given how close polls have been of late – this would be reflected in the borrowing rate. But the market is quite clearly saying that, with all of the uncertainty in the world (not least from Deutsche Bank and the Eurozone), Brexit is not really atop the list of global worries. There are plenty of technical factors behind the 1.59pc, to be sure. But it will make it harder for Osborne to invoke jittery markets when arguing for an ‘in’ vote.

When he entered the Treasury, Osborne was expecting to pay interest rates closer to 6pc. Now he has unexpectedly (and undeservedly) profited from the market crash, he can afford to borrow a good amount more. Lower rates will save him north of £20 billion: a responsible Chancellor would just bank it, given that he is still nursing one of the worst deficits in the world with another downturn in prospect. So will he? Look out for this in next month’s Budget.

Join Andrew Neil, Fraser Nelson and James Forsyth at the Budget briefing, just hours after George Osborne delivers the Budget on 16 March 2016.

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