Few, not even Ed Balls, will have envied the Chancellor’s position at the despatch box today.
Britain faces its worst economic crisis since the 1930s. With rising public debt and unemployment, coupled with declining manufacturing and interest rates, Alistair Darling, in characteristically sanguine mood, had already warned that 2009 would be ‘a difficult year’.
With his limited room for manoeuvre, Darling’s challenge was to set out a path for economic recovery in the medium term and plant the seeds of those elusive green shoots.
But today’s budget was about more than balancing the books. It was also pivotal politically. Today’s budget could be the last before the election is announced, and follows hard on the complex array of outcomes from the G20 (not to mention Smeargate). The inhabitants of Numbers 10 and 11 (and the War Room in Number 12) will be hoping that it provides a much needed boost to Labour’s ailing fortunes in the polls.
The bad news, as is often the case, had been trailed beforehand. Public borrowing is set to rise to above £170bn and GDP to contract by up to 3.5% this year. The good news, or less bad news, was that whilst this will be the deepest and longest down-turn in living memory the economy will see the beginnings of a recovery in 2010 with a low level of growth at 1.25%.
Such economic constraints overshadowed the Budget and gave Darling little wriggle-room today. Yet, he still managed some populist giveaways.
Perhaps seeking to appeal to the more traditional labour vote this was touted as a ‘budget for jobs’ and a raft of measures were set out to boost employment. For those on low incomes, the out of work and pensioners there were promises of increased tax credits and benefits. The hike in the top rate of income tax will have also helped here.
For business and ‘middle England’ there were also goodies, with a package of measures to help businesses and a series of measures to support the ailing property market and to attract those all important first time buyers. The Chancellor also took steps towards setting out Labour’s green credentials, long eclipsed (in media terms at least) by those of the Conservatives, with proposals for a more eco-friendly post recessionary world.
In this uncertain economic and political climate, this was a cautious budget from a cautious man, seeking not to rock the economic boat but tentatively to turn the political tide. Whether it will be enough to restore economic stability or to revive the fortunes of Darling’s old friends Brown and Prudence, only time will tell.