There is going to be some extremely bad news in the Budget. Public sector borrowing is rocketing out of control, and is now expected to hit around £190 billion in 2010/11, and threatens to bury any recovery and create a double dip recession. With their new 45p income tax rate, the Government have sadly already started to put in place symbolic measures that will do little for the public finances but will undermine Britain’s long term competitiveness. Those measures will have to be backed up by big tax rises if the Government don’t put in place significant cuts in public spending. With the tax burden having gone up significantly over the last ten years even before this crisis got under way, that would mean a crippling burden for ordinary families and do massive damage to Britain’s economic prospects.
That makes Alistair Darling’s pledge to cut spending by £15 billion very welcome, if perhaps insufficiently ambitious.
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