Budget 2008: Combating child poverty & helping the environment

Devising this year’s Budget can’t have been easy for the Government.

On the one hand, a slowdown seems likely over the next year or so. Two intertwined factors — tightening credit and slowing or falling house prices — will constrain consumer spending and tax receipts. The Government is already nearing the limits of its fiscal rules. Of course, any slowdown in the UK will not be on the scale of, say, the expected US slowdown (many analysts believe that growth is likely to pick back up in 2009). But the Government will nevertheless need to keep a very firm hand on the public finances.

On the other hand, the Government faces urgent pressures to spend to meet various goals it has announced in the past — most notably, the 2010 child poverty target (announced in 1998), but also other goals, such as the aspiration to raise state school spending to the level of private schools (announced in 2006).