Professor Gary Cook is Head of Economics, Finance and Accounting at the University of Liverpool’s Management School
“No surprises as the Chancellor confirms his commitment to austerity in the Budget.
“Chancellor George Osborne has confirmed what was already well known in his budget speech. His forecast for growth next year in the UK has been halved from 1.2% to 0.6% in the face of continued economic stagnation in the UK and much of continental Europe.
Slower growth
“This slower growth makes it more difficult for the Chancellor to balance the books, as it means lower tax receipts compared to those forecast when the government’s austerity plans were originally laid out.
“This means some key targets, such as reducing the size of the national debt (the sum of all past borrowing by the government) relative to the size of the economy, will occur one year later than the Chancellor had hoped.
“These were the very reasons the UK lost its triple-A credit rating a few weeks ago.
“The annual deficit between income and expenditure is falling, but not as fast as planned and this means further borrowing will add to the national debt. The Chancellor had little room for manoeuvre, but did announce an additional £2.5 billion of infrastructure spending, both widely expected and widely called for.
“This will be paid for by expenditure cuts elsewhere, which have yet to be announced.
“Acknowledging the need to try to maintain recovery through active policy, explicit encouragement has been given to the Bank of England to persist with its policy of pumping money into the economy, so-called quantitative easing. Some small tax breaks for innovation were also announced.
“Predictably, a further crackdown on tax avoidance has been promised. Austerity in public sector pay will continue, with an extension by a further year of the 1% cap on public sector pay rises.
“Help for first time buyers and faster progress towards a £10,000 personal tax allowance were among the very few crumbs of comfort for the general public.
Sluggish
“What does it all add up to? A frank admission that balancing the books will take longer than expected and that the economy will remain more sluggish than hoped, but no backing off from austerity.
“More of the same for a little bit longer – and doubtless debate will continue on whether or not the Chancellor might have loosened the purse strings for public investment a little more.
“Probably.”
