Above all else, George Osborne promised that he would reduce Britain’s record deficit. So, a month ahead of his third Budget as Chancellor, how’s he doing? Today’s borrowing figures suggest that Osborne is likely to better the Office for Budget Responsibility’s deficit forecast of £127bn for 2011-12 (see graph). Borrowing so far this year is £93.5bn, compared with £109.2bn in the same period last year.
But ever-worse growth forecasts (the National Institute of Economic and Social Research expects the economy to shrink by 0.1 per cent this year) suggest Osborne’s luck won’t last. And with unemployment heading towards three million and the economy on the brink of a double-dip recession, the Chancellor’s decision to prioritise deficit reduction above all else still looks like the wrong call. As Keynes once remarked, “look after unemployment and the Budget will look after itself”.
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