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Pre-Budget Report

Puzzled and confused seems to be the Liberal Democrat position on many things. There are many other factors driving the corporate bond market, but only one factor drives the sovereign debt credit default market, which is the creditworthiness of the United Kingdom Government. This tax policy is driven not by the economic cycle, but by the electoral timetable—a £20 billion tax cut before the general election financed by a £40 billion tax increase afterwards. That is just the bit of the iceberg we can see. We have heard during the past 24 hours that the Treasury's plan was to use more realistic assumptions, and to announce a tax increase package including an extra £5 billion a year of VAT after 2011 by introducing an 18.5 per cent. rate. Clearly, the Prime Minister, who promised us transparency, did not approve of such candour.