It was a cautious Autumn Statement today, both in economic and political terms. The chancellor is saving any pre-election giveaways for the Budgets in 2014 and 2015
George Osborne must have dreamed about today. Instead of worse growth forecasts, higher borrowing and more cuts, the economy has at last turned – as the new Office for Budget Responsibility forecasts suggest.
But as his statement shows, the chancellor is not sure whether to declare victory or not. This is largely due to the politics. If he says the tough times are over then the Conservatives’ advantage in being ‘the people who can do tough times’ disappears. So we got a lot of ‘the work goes on’ feel from the chancellor, and only a certain degree of giveaways.
Osborne is right to be cautious in economic terms too. It’s still a pretty feeble recovery by historical standards, it is deeply unbalanced and may not last.
The focus in the run up to the Autumn Statement has been on energy prices as the public demands action on the cost of living agenda. The coalition switch from ‘polluter pays’ (via energy bills) to taxpayer pays is smart politics but, just like the continuing freeze on fuel tax, spells real problems for greening our economy over the longer term as the price signals are no longer aligned with this aim.
Elsewhere there were sensible things, like moves towards a tax break for social investment, more plans for infrastructure investment (if we believe they will happen) and news on scrapping national insurance contributions for younger people.
But there was nothing that will radically affect the trajectory of the economy, upset many apple carts or key swing voters. Presumably, goodies are being left for Budget 2014, and even for pre-election Budget 2015 – and most of the difficult stuff for post election.
