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The Budget

I will come to that in a moment. I will look at statements made about the Budgets in 2004, 2005 and 2006. The BBC headline in 2004: ““City questions the Budget forecasts””. The Financial Times, in 2005: ““Argument on forecasts unresolved””, and in 2006, from another source: ““Growth predictions look precarious as Brown to go after tax avoiders””. The right hon. Gentleman said that that was completely backed by the Conservative party. I am absolutely prepared to accept that the Prime Minister, when he was Leader of the Opposition, did make such a statement. His predecessor Michael Howard, however, said something rather different, according to the BBC article: ““Personal debt is at record levels. Conservative leader Michael Howard said on Wednesday that spending was being financed by borrowing to be paid for by future higher taxes…‘This is a credit card budget from a credit card Chancellor’””. Not everyone was gloomy about that 2004 Budget, with Goldman Sachs saying that some economists were predicting real extra cash for the Government because City bonuses would rise significantly and would be taxed, adding to the overall take of the Treasury; it is interesting what we hear now about bankers when set against that context. Goldman Sachs said similar positive things about the Chancellor in 2005, but John Hawksworth from PricewaterhouseCoopers said: ““The Budget has not changed our view that the government will start the next cycle with a structural current budget deficit. Correcting this is likely to require some combination of tax increases and lower public spending growth in the years ahead.”” That is not 2008 or 2009, but 2005. In essence, the difficulties were present and being stored over that period. Let us move to some of the statements made after the Budget in 2006: ““Many economists believe that despite the unusual rosiness of January’s public finance figures, Brown’s books may be in a worse state than first thought as the figures were propped up by one-off tax payments””. The same article continued: ““A report out from the Ernst & Young Item Club say that although the Chancellor may be able to muddle his way through the Treasury’s new 12 year cycle, the outlook for the UK economy is shaky. Rising taxes and energy bills are sapping spending power, raising doubts over Brown’s forecasts for economic growth.”” Today, at least, we have the independent Office for Budget Responsibility.