The Budget: The Big Bits

The Deficit: It's larger then expected. The structural deficit is 0.6% higher then predicted in the March budget. The government plans for this to peak in 2010-11 and be eradicated by 2014-15. This will be achieved by 10/90 split between tax rises and spending cuts. Although a commitment to protect certain, unspecified aspects of capital spending has been made no real details of how and where the cuts will made have been announced. That will have to wait until a spending review that will take place in October 2010. The purpose of making these woefully optimistic and unsupported claims of deficit reduction now is to build up confidence in UK debt. If the markets cannot be convinced that the UK is able to meet its current debt obligations then the cost of future borrowing will rise and Britain's credit rating will be downgraded.

The Recovery: The plan is for the UK economy to experience 0.5% growth in 2010 before rising to 2% in 2011 and 2.5% by 2015 with the UK entering full UK recovery in 2016-17 which is a good four years later then earlier predictions. The growth will be dependent on the UK economy restructuring towards domestic production for export and domestic consumption. To this end there are lots of tax cuts and restructuring of the tax system to stimulate entrepreneurship including the reduction in employers National Insurance payments. Of course the growth predictions are totally dependent on this restructuring plan being successful. Even in the event that it is a complete success I think the estimate of 2.5% by 2015 is about 0.5% too optimistic and the upper estimates are just ridiculous.

There is obviously a lot more in the budget including the dry, technical details about the changes to the tax systems. There are also a few indicators of changes to social policy and political squabbles within the coalition where the LibDem have won tiny concessions like the £250 increase to public sectors worker earning less the £21,000 in exchange for signing up to a budget that was mainly written about a year before the government got elected. I will try and get round to detailing these tomorrow but it's a choice between that and the England game and there's really no suprises in this budget.