Darling’s Budget leaves only £2.8bn leeway
Deteriorating public finances and the credit squeeze have left Darling with only £2.8bn to play with
The Budget has revealed an underlying deterioration of £7.5bn in the public
finances, as a result of overconfident autumn forecasts and the deteriorating
impact of the credit squeeze, according to the
Institute for Fiscal
Studies.
Chancellor Alistair Darling has been left with almost no room to manoeuvre
without breaching the government’s fiscal rules and forecasts will be vulnerable
to small fluctuations in spending or receipts, the Financial Times
reports.
The IFS estimated the chancellor had £2.8bn leeway against the fiscal rules
for 2010-11 – considerably below
HM
Revenue & Customs’ average forecasting error of £18bn two years ahead.
‘If the downturn is deeper than expected, if he is over-optimistic about the
underlying strength of tax revenues, or if political pressure requires further
giveaways, then Mr Darling or his successor may have to inflict more pain,’said
Robert Chote, IFS director said.
Further reading:
Budget 08: Avoidance swoop to plug economic gap
Budget 08 Special Report and AATV analysis
Read
story in the Financial Times