There are three dimensions to a UK budget: the political theatre, its underlying economics, and the measures themselves. My view is that the new Chancellor’s Budget speech was the most effective financial statement of any Chancellor since Nigel Lawson, for whom I worked as a Special Adviser. Rishi Sunak had a command of the economics, mastery over the detail to the measures and brought a political brio – not seen for 30 years or more – to the statement. The Budget offers an empirical, Conservative response to the circumstances of early 2020s. Understandably, however, some people are asking: what is Conservative about spending and borrowing hundreds of billions of pounds?
In terms of borrowing, put simply, the central question is not the scale of borrowing but the cost. The Budget papers show the cost of debt for the UK falling over the next five years, not rising. Why? This reflects low inflation, interest rates, and the international bond markets that trade UK government debt.
This budget has done – in macro-economic terms – what has been needed for some time.
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