Time for bravery, not cautionThe global financial storm that started last summer rages on. It’s howling as hard as ever in the markets.

Yet the tempest had only a walk-on part in Alistair Darling’s first Budget, and that was purely to allow the chancellor to stress its global nature. Blame the world, not me, if things go wrong, was the message.

The overwhelming impression conveyed by the Budget was of a chancellor at the mercy of the markets ­ simply twiddling his thumbs, hoping that the economic weather would improve.

Sadly, there is a lot of truth in the unflattering picture. Darling’s economic forecasts may or may not be over-optimistic. But even on the basis of his own arithmetic, the chancellor’s back is firmly to the wall.

The debt numbers have already been fudged by the exclusion of Northern Rock ­ but increased borrowing will take the government to the very brink of breaching its cardinal rule of keeping debt to within a ceiling of 40% of GDP.

Meanwhile taxes are rising faster than spending ­ taking air out of an already deflating economy. And this is probably the golden scenario. The financial sector pays nearly a third of all corporation tax receipts. Our dependence on finance is one reason the financial storm menaces Britain more than other countries.

There may be little a hemmed-in government can do to offset the effects of the storm. Darling cannot pick up any slack by cutting tax or spending more. David Cameron’s gibe about the government having failed to prepare for the worst stung precisely because it was true.

But Darling seems to be trapped in a ‘business as usual’ mentality. And this may prevent him from taking steps to mitigate the storm. Some of these steps fall outside the scope of the Budget ­ forcing banks to recognise losses and raise additional capital if necessary to restore the supply of credit to the economy. It’s hard to know whether Darling has got to grips with this. He talked vaguely in the Budget about encouraging banks to offer long-term fixed rate mortgages. Who on earth does he think would offer such a product?

On tax, there was a poverty of ambition. Darling was right to stick to his guns on the non-doms. But his proposals certainly fail Colbert’s test of a good tax ­ that it should remove the maximum number of feathers from the goose for the minimum of hissing.
As for a simplified tax system ­ or indeed one that does not favour debt over equity finance (one of the root causes of the financial boom that preceded the storm) ­ those measures will have to wait for a more courageous chancellor.

Jonathan Ford was a founding editor of Breakingviews.com