{"text":[[{"start":6.38,"text":"Before chancellor John Healey stood up in the House of Commons to deliver the Budget, there were many things we already knew about the performance of the UK and the world economy, and so about the difficult challenges the government and country confront. What we now know is that the government is, in essence, hoping for the best. We also know that it is as good as its predecessors at offering spending gimmicks and tax tweaks that will achieve nothing significant, other than to make people’s lives even more complicated. Is there a serious political strategy here? Maybe. But, given that forecasts indicate harsh future curbs on public spending, that strategy might just be for an early election. Is there an economic strategy? Not one I can see."}],[{"start":49,"text":"The Office for Budget Responsibility’s Economic and Fiscal Outlook contains a particularly revealing chart on the longer-term performance of the economy: it shows that over the 10 years to 2026-27, average annual growth in real household disposable income per person averaged a mere 0.3 per cent. This is far lower than over any comparable period at least since the 1960s. Alas, according to the OBR’s forecasts, this is not going to improve: the average over the 10 years to 2031-32 will still be 0.3 per cent. In sum, according to the OBR, even a decade on from the onset of the Covid pandemic, real household disposable income will be just 1 per cent higher than before it began. This stagnation is largely driven by the UK’s poor productivity performance."}],[{"start":null,"text":"
"}],[{"start":97.16,"text":"In the long run, this matters most. But other shocks have also been salient. One is the sharp rise in interest rates since the end of the pandemic. Another has been the jumps in inflation brought about by energy shocks."}],[{"start":110.76,"text":"As the OBR points out, “The rise in interest rates and increase in the inflation forecast leaves pre-measures borrowing an average of £11bn per year higher than in March.” But the government has also decided to take new measures that increase borrowing by £8bn in 2026-27, £4bn in 2027-28 and £0.4bn in 2028-29, and then reduce borrowing by £7bn, on average, in the years thereafter. A good guess is that those cuts in borrowing in the outer years will prove to be a fairy tale, as they have often been before."}],[{"start":146.82,"text":"Indeed, one of the charts offered by the OBR shows, in its own words, that “since 2022 plans to consolidate borrowing have been repeatedly delayed”. Thus, “in the near-term the pace of . . . consolidation has again slowed, with borrowing between 2026-27 and 2028-29 now forecast to be around 0.5 per cent of GDP a year higher on average than forecast in November 2025.”"}],[{"start":null,"text":""}],[{"start":171.74,"text":"The broad picture then is of net public debt at 96 per cent of GDP in 2031-32, the same as in this fiscal year. Is this unreasonable? Arguably not, given the shocks of the past two decades. But indebtedness is stuck at far higher levels than in the early 2000s. Unavoidably, this creates fragility, as the recent jump in interest rates has shown, especially for a country dependent on sustained net inflows of capital from abroad."}],[{"start":199.5,"text":"In sum, the OBR shows a country with near-stagnant real incomes and fragile public finances. That is not what a chancellor wants. But Healey had to deal with what was in front of him. What is striking, in this context, is the small size of the measures. On spending, these include a £100 council tax rebate, at a cost this financial year of £2.6bn, funding for the “defence investment plan” at an additional £1.8bn a year and some adjustments to other spending. On taxation, we have the inevitable further freeze on fuel duty and temporary zero-rating of VAT on domestic electricity. These lower receipts by £1.3bn this year. A number of tax administration, compliance and debt collection measures raise £3.6bn by 2031-32. Changes to corporation and bank taxes are also estimated to raise an average of £2.2bn a year across the forecasts. Finally, changes to tax rates on savings and property incomes — classic examples of Treasury fiddling — raise a negligible £1bn a year from 2028-29. This is trivial stuff. Why did he bother?"}],[{"start":null,"text":""}],[{"start":268.66,"text":"Was there anything substantial? Yes. The proposed changes to energy markets might turn out to be quite significant. The planned removal of standing charges on gas bills would, Healey said, benefit 23mn households. Rather more important might be the shift to fixed-price contracts on renewables. In all, however, there was little here to change one’s view of the UK’s economic or political plight. The failures and the risks remain much the same, as do the prospects."}],[{"start":295.1,"text":"The aim of the Budget was to create a breathing space for “working people” at a difficult moment for the economy and so the public. It was also, just as much, to provide a breathing space for the government. It did what governments usually do in such situations: spread lots of tiny goodies around. This is far better than spreading hugely expensive goodies around. The time for that, the government rightly recognises, has ended. Given that reality, it has behaved sensibly, even though the measures evoke little enthusiasm. The question is whether the government can, with time, do anything more effective."}],[{"start":327.58,"text":"The political and fiscal constraints make decisive action of any kind hard to implement. The British are not going to abandon their welfare state. But they are also unwilling to pay higher taxes or accept radical economic deregulation. At the same time, poor economic performance is also intolerable and, in the long run, undermines confidence in democracy itself. Politics needs to find a way out of this predicament. Is Burnham up to that task? I doubt it. But I very much hope to be proved wrong."}],[{"start":359.74,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1793260383_6188.mp3"}