The 2013 budget is George Osborne’s last chance to make an impact as chancellor of the exchequer. Next time he presents a budget, all eyes will be on the general election and everything will be seen through that prism. Fundamentally, Osborne is a managerial chancellor in the highly conservative treasury mould: he could equally have been a civil servant. Indeed, civil servants must be very content with his policies.
His first act, in true treasury style, was to break the first rule in the fiscal consolidation handbook: he ramped up taxes and promised some spending cuts later, hoping that growth would do most of the work in reducing the deficit. Of course, growth has not materialised and total government spending remains uncut. The tax rises — together with other events outside the chancellor’s control such as the euro crisis — have contributed to reducing growth. When you cut a deficit, the rule is to cut spending first — especially if the deficit is caused by high spending.
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