Newspaper article The Evening Standard (London, England)

Osborne's Hopes of Taming This Deficit by 2020? Slim to None

Newspaper article The Evening Standard (London, England)

Osborne's Hopes of Taming This Deficit by 2020? Slim to None

Article excerpt

Byline: Russell Lynch budget analysis

THE Chancellor's first Trueblue Budget said as much about his own political ambitions of moving to 10 Downing Street next door as it did about "finishing the job" by returning the UK's public finances to the black.

But any daydreams he might harbour of succeeding David Cameron as the man who cut taxes and lifted the wages of millions while slashing the deficit to boot look easier on the pages of the rosy forecasts of the Office for Budget Responsibility (OBR) than in reality.

In 2010, the Chancellor said he would cut the deficit in one term. Before this year's election, he said he would take another five years to balance the books. But the bald facts are that it will be a miracle if Osborne has cleared the national deficit in two parliaments and 10 years as Chancellor before the UK next goes to the polls. I'll give him two hopes: Bob Hope and no hope.

First, he has given himself less breathing space by smoothing spending cuts. The first surplus for nearly 20 years PS5.2 billion which was supposed to arrive in 2018-19 according to the March Budget has turned into PS6.4 billion in borrowing. A surplus of PS10 billion finally arrives in 2019-20. The increased largesse also means that he has less margin for error on meeting his goal of balancing the underlying budget by 2018-9, the third year of the OBR's forecast.

Moreover, the harder figures to hit are based on the OBR's growth forecasts, which are almost certain to be total nonsense when economists can barely predict what's going to happen in six months' time, let alone five years. That's not their fault, it's just the way economic forecasting is, however jazzy your model.

For example, every year from 2017 to 2019, the OBR is predicting trend growth of 2.4% for the economy. Not too hot, not too cold, steady-as-shegoes Goldilocks growth. That's never happened before in nearly 70 years of measuring GDP.

The closest I can find in the numbers is in the early years of the Great Moderation when UK growth was 2. …

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