The forecasts would probably have been a bit better still if the OBR had been allowed by the chancellor to use more recent data.Īdd to this the tax rises – and things like the suspension of the triple lock on pensions – and forecast deficits are lower too than in March. The OBR forecasts were for more growth than back in March – mainly thanks to the strong bounce back so far from the pandemic lockdowns.Īnd the so called ‘scarring’ at 2% was less than previously forecast (at 3%). Where are we now on the debt and deficit?Īnd what did Sunak do about the risks to the economy – inflation and a potential hike in interest rates being amongst the biggest dangers – and a return to more Covid-19 restrictions also being a strong possibility. How much of the pre briefed spending was new, how much in fact multi-year and so less bit than it sounded, how much was in nominal rather than real terms, how much was capital – when arguably current was what was needed? In September we had the announcement that despite the manifesto pledges, national insurance would go up (to help health and social care).īoth of these moves were accounted for in the Budget arithmetic with the Office for Budget Responsiblity noting that taking the March and October budgets together, “the chancellor has raised taxes by more this year than in any single year since Norman Lamont and Ken Clarkes’ two 1993 Budgets”.
In March we had a substantial and largely disguised income tax rise as personal allowances and higher thresholds were frozen for four years – while there were announcements of steep future rises in corporation tax. So, we need to see all three together to try to understand what is going on – and to try to see whether ‘brand Sunak’ is a ‘big spender’, Johnson type guy or a small ‘c’ conservative, ‘worry about the deficit’ kind of guy. This was a strange but very significant fiscal event.Īlready we have had two such announcements in 2021 and they were massive.
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