Alistair Darling is adept at playing a poor hand well.    Today he will announce triumphantly that the deficit is coming down faster than expected (perhaps to £165bn, from higher bonus tax proceeds and lower unemployment costs than predicted) and that with cuts in stamp duty for first-time house-buyers, a green infrastructure fund, a capital growth fund for SMEs and more government business to go to them, and more robust lending targets for the banks, Britain is out of the woods and on its way.

What he will not say is that unemployment costs have come down probably because more people have withdrawn from the labour market and are not claiming.   Reduced stamp duty is of little value when housebuilding has collapsed (at the lowest ebb since 1922) and there are very few houses to buy, and when 1.8 million households remain on waiting lists for Council housing, but almost none are being built.   The real problem for businesses is that the banks have been allowed to get away for over 2 years with pocketing quantitative easing (printed money) and the benefits of bail-outs whilst letting lending to business dwindle from 20% annual growth in 2007 to nil/negative today, and the Government hasn’t used its majority stake in RBS and Lloyds to stop it.

But the really big likely omission from the Budget will be any systematic action by Government to promote a public sector jobs programme in house-building, infrastructure improvement, and driving the new green digital economy in order to reduce unemployment by 1 million in 2 years and thus swing the economy out of benefit-dependent joblessness into job-providing growth yielding higher income tax, NI and VAT revenues.   Sadly, the Government is still stuck in Thatcher market mode where only the private sector can take the lead.   It will be a (last) opportunity missed that could well be fatal.

Bookmark to: