It was an election PBR. But what else could it be?
So, the pre-Budget report was an election pre-Budget report. But it was always going to be that. Given that the General Election is now only a few months away, and the chancellor was delivering a PBR to deal with a crisis still underway, what else could it have been?
Here are the unhappy coincidences: the recession is still underway and having invested public spending heavily Darling’s call was should he start cutting to reduce the public deficit, or should he stand by his spending plans and avoid derailing the recovery? He chose the latter. Every economist I’ve read says timing is all important and, while they all accept the public deficit has to be dealt with, I can’t recall any that say the spending cuts should happen now. It’s all about the timing.
And that gives Darling and Gordon Brown their strongest election campaign platform – that they have managed the economy in the only way it could have been managed and that they put off the spending cuts, or tax rises, until the economy was on the road to good health, and not a moment before.
And though there may be unanswered questions, I think the PBR also asks more questions of the Tory economic policy and the timing of the severe cuts that George Osborne claimed he would make at his party’s conference last month. When exactly would they begin the cuts in public spending – what kind of risk do they present to the recovery?
Sure, there was plenty to attack in Darling’s PBR, but it’s not clear, to me at least, that the attacks have revealed anyone with better ideas.
Holding off on cuts agrees with most economists. We know some money is going to come from national insurance increases. We just don’t know the most significant cuts are coming from. Yet.