View all newsletters
Sign up to our newsletters

Support 110 years of independent journalism.

  1. Business
  2. Economics
12 February 2013

Don’t expect Osborne to play a “trump card” at the Budget

The Chancellor's fiscal conservatism means he won't deliver the tax cuts demanded by the right or the spending increases demanded by the left.

By George Eaton

On all sides of the coalition, next month’s Budget is viewed as the last chance to make a significant difference to growth before the general election. Conservative MPs are urging George Osborne to make radical tax cuts (this week’s NS leader looked at Robert Halfon’s call for a reinstated 10p tax band; others are pushing for dramatic cuts to corporation tax and capital gains tax), while the Lib Dems are arguing for a major increase in infrastructure spending. As the Times’s Rachel Sylvester writes in her column today, the pressure is on Osborne to play “a trump card” when he steps up to the despatch box on 20 March.

But even with Britain facing a triple-dip recession at worst and prolonged stagnation at best, it is doubtful that he will deliver. While Tory MPs argue that any tax cuts would be self-financing and, therefore, that Osborne could act without abandoning his commitment to deficit reduction, the Chancellor does not accept their logic. As he remarked during a recent event at the US-based Manhattan Institute: 

I am more of a Thatcherite than a Reaganite when it comes to tax policy…I’m a fiscal conservative and I don’t want to take risks with my public finances on an assumption that we are at some point in the Laffer curve. What I would say is let’s see the proof in the pudding, in other words. I’m a low tax conservative, I want to reduce taxes but I basically think you have to do the hard work of reducing the cost of government to pay for those lower taxes.

For Osborne, tax cuts follow successful deficit reduction; they do not precede it.  

On the spending side, while it’s possible and even probable that Osborne will raise planned spending on infrastructure (as he did at last year’s Autumn Statement), he will only do so by squeezing current spending, limiting the effectiveness of any stimulus. 

Select and enter your email address Your weekly guide to the best writing on ideas, politics, books and culture every Saturday. The best way to sign up for The Saturday Read is via saturdayread.substack.com The New Statesman's quick and essential guide to the news and politics of the day. The best way to sign up for Morning Call is via morningcall.substack.com Our Thursday ideas newsletter, delving into philosophy, criticism, and intellectual history. The best way to sign up for The Salvo is via thesalvo.substack.com Stay up to date with NS events, subscription offers & updates. Weekly analysis of the shift to a new economy from the New Statesman's Spotlight on Policy team. The best way to sign up for The Green Transition is via spotlightonpolicy.substack.com
  • Administration / Office
  • Arts and Culture
  • Board Member
  • Business / Corporate Services
  • Client / Customer Services
  • Communications
  • Construction, Works, Engineering
  • Education, Curriculum and Teaching
  • Environment, Conservation and NRM
  • Facility / Grounds Management and Maintenance
  • Finance Management
  • Health - Medical and Nursing Management
  • HR, Training and Organisational Development
  • Information and Communications Technology
  • Information Services, Statistics, Records, Archives
  • Infrastructure Management - Transport, Utilities
  • Legal Officers and Practitioners
  • Librarians and Library Management
  • Management
  • Marketing
  • OH&S, Risk Management
  • Operations Management
  • Planning, Policy, Strategy
  • Printing, Design, Publishing, Web
  • Projects, Programs and Advisors
  • Property, Assets and Fleet Management
  • Public Relations and Media
  • Purchasing and Procurement
  • Quality Management
  • Science and Technical Research and Development
  • Security and Law Enforcement
  • Service Delivery
  • Sport and Recreation
  • Travel, Accommodation, Tourism
  • Wellbeing, Community / Social Services
Visit our privacy Policy for more information about our services, how New Statesman Media Group may use, process and share your personal data, including information on your rights in respect of your personal data and how you can unsubscribe from future marketing communications.
THANK YOU

To make a difference at this stage, Osborne would finally need to accept the Keynesian argument that governments should intentionally run deficits at times of economic stagnation. But borrowing for growth would be a tacit admission that his nemesis, Ed Balls, was right and he was wrong. And, for largely political reasons, that is something Osborne is not prepared to do. 

Content from our partners
Development finance reform: the key to climate action
Individually rare, collectively common – how do we transform the lives of people with rare diseases?
Future proofing the NHS

Select and enter your email address Your weekly guide to the best writing on ideas, politics, books and culture every Saturday. The best way to sign up for The Saturday Read is via saturdayread.substack.com The New Statesman's quick and essential guide to the news and politics of the day. The best way to sign up for Morning Call is via morningcall.substack.com Our Thursday ideas newsletter, delving into philosophy, criticism, and intellectual history. The best way to sign up for The Salvo is via thesalvo.substack.com Stay up to date with NS events, subscription offers & updates. Weekly analysis of the shift to a new economy from the New Statesman's Spotlight on Policy team. The best way to sign up for The Green Transition is via spotlightonpolicy.substack.com
  • Administration / Office
  • Arts and Culture
  • Board Member
  • Business / Corporate Services
  • Client / Customer Services
  • Communications
  • Construction, Works, Engineering
  • Education, Curriculum and Teaching
  • Environment, Conservation and NRM
  • Facility / Grounds Management and Maintenance
  • Finance Management
  • Health - Medical and Nursing Management
  • HR, Training and Organisational Development
  • Information and Communications Technology
  • Information Services, Statistics, Records, Archives
  • Infrastructure Management - Transport, Utilities
  • Legal Officers and Practitioners
  • Librarians and Library Management
  • Management
  • Marketing
  • OH&S, Risk Management
  • Operations Management
  • Planning, Policy, Strategy
  • Printing, Design, Publishing, Web
  • Projects, Programs and Advisors
  • Property, Assets and Fleet Management
  • Public Relations and Media
  • Purchasing and Procurement
  • Quality Management
  • Science and Technical Research and Development
  • Security and Law Enforcement
  • Service Delivery
  • Sport and Recreation
  • Travel, Accommodation, Tourism
  • Wellbeing, Community / Social Services
Visit our privacy Policy for more information about our services, how New Statesman Media Group may use, process and share your personal data, including information on your rights in respect of your personal data and how you can unsubscribe from future marketing communications.
THANK YOU