For years the Tories used to criticise the way Gordon Brown and Labour went about the run up to the Budget with the pre-briefings, helpful leaks and mood manipulation (lower expectations and then over-deliver). This we were told was the work of characters like Charlie Whelan and Damien McBride.
Fair enough. But George Osborne has proved that anything Brown can do he can do much better. The run up to the Budget saw all the classics. Get the major macro news (ie the fact that growth is going to be worse than the last forecast – despite all the measures for growth in the Budget - and that the fiscal position has not improved) out the previous weekend so the markets are not surprised and so that the big story on the day is not a macro one (and the release of the fiscal numbers on Monday helped shape this too). Get out a few days early any moves that are nice stories but will never get much attention on Budget day. And then, of course, save the rabbit for the conjuring act on the day.
In truth Osborne did not have much to play with. His big moves happened last year. That set out the big tax rises and benefit cuts (many of them coming in this April even though not announced in this Budget) and of course the massive retrenchment in public spending. Now he is waiting to see if the economy will come good. And praying very hard that the Bank of England keeps interest rates down.
Yes, there had to be a few moves on growth to show that the government is not just deficit-obsessed. But despite the ritual welcome from business lobby groups, they were largely small beer and if they ever work, will not do so for years.
There was also a little to show that the government does care about the ‘squeezed middle’ with moves to keep petrol prices down and to raise the allowance a bit. Moves on helping first time buyers – and at the same time the house building industry - were welcome although the new scheme looks very similar to Direct Homebuy that the previous government had brought in.
And of course there had to be enough in the package to keep Tory back-benchers happy. The clever rabbit of the cut in fuel duty did the trick in spades there. So too did nods towards insurance and income tax being merged which excites tax cutters who hope that in so doing the overall rates will be revealed as very high and so pressure for cutting tax will become the prevailing mood.
He also had to help out Nick Clegg a bit – most significantly via the Green Investment Bank and the small raising of tax allowances. And there were a few big measures that slipped through without much attention but with big implications for households and infrastructure, like the carbon price floor and the stealth tax of raising tax allowances in future with CPI not RPI.
Osborne played his hand as well as he could – he is a sharp political operator - helped on by most of the media that more or less want him to succeed. It is some smart politics to cover a Budget that is more or less steady as she goes. What the public makes of it is another matter. They will like the fuel duty cut but they are hurting; they can’t see growth or jobs, and they wonder about the future for their kids.
Osborne will hope that this is the toughest year for the economy . It probably is. But if he is not out of the woods next year, then his troops – let alone the country – will start to worry.
Dan Corry is director of economics at FTI Consulting and is a former Treasury and Downing Street adviser.
