Lucky old George Osborne. The British economy is not in “meltdown,” but
churning out tax revenue like a fruit machine. Figures out from the ONS today show that the tax haul for January alone was
£58.4 billion – pushing the public finances into a surplus £3.7 billion for that month (an almighty £3.6 billion more than expected). If this rate continues (no reason why
not, seeing as we’re all getting drunk on Mervyn King’s underpriced debt again), then Citi estimates he will have £8 billion more to play with than expected in the current financial year. So
what will he do?
Osborne’s decision will tell us plenty about what type of Chancellor he is. When we say that he has £8 billion to play with, we mean that his overspend is £140 billion rather than £148 billion. It’s still an abysmal situation (and only marginally better than Darling would have managed). So it would be pretty hard to justify a penny more state spending – even if it has ‘Big Society’ written all over it. I have made the case for an emergency tax cut for the low-paid, to speed the IDS reforms and further incentivise the unemployed to take the jobs which (as I blogged on Sunday) immigrants are taking.
The slightest sign of slippage, the tiniest addition to Osborne’s state spending plans, would be seen as a Plan B; that he’s losing his nerve. Osborne has restored confidence in Britain’s fiscal consolidation – this is what is boosting the economy. He should resist any temptation to up spending now.
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