David Prosser: Scrapping the PBR now suits everyone, including George Osborne

Outlook: For a Chancellor keen to impose the hair shirt, it will be useful not to have to revise worrying public finance forecasts in the light of better

There are a number of reasons to applaud George Osborne's decision to dump the pre-Budget report, an announcement that is expected from the Chancellor shortly. Not least, a single annual Budget should ordinarily be sufficient for the Treasury to set out its plans – and now we are moving past the financial crisis, a second mini-Budget in the autumn is unnecessary.

The PBR, introduced by Gordon Brown more than a decade ago, was always going to be a tempting opportunity for chancellors to indulge in a spot of political grandstanding. So it proved with Mr Brown, who regularly used his statements to crow about populist policies that he would then launch all over again in the Budget proper.

Although Alistair Darling, Mr Brown's Chancellor once he moved into No 10, was sometimes guilty of the same tricks, he too had begun to make the case for dropping the PBR before the electorate intervened in May. Happily, Mr Osborne agrees. In fact, he could hardly do otherwise, given the demands he is making of other departments for cut-backs and restraint. The PBR has become an expensive waste of the Treasury's resources – a simple autumn statement on the state of the public finances should be much cheaper to produce.

Still, dumping the PBR this year may also reflect a bit of opportunism on the part of the latest Chancellor. Mr Osborne's spending cuts will now have to be based on the forecasts he made about the public finances in June's emergency Budget, which are already beginning to look overly pessimistic (spending has come in below expectations so far this financial year and borrowing has been lower than predicted too).

For a Chancellor keen to impose the hair shirt, it will be useful not to have to revise those forecasts in the light of the better data. That's especially true given the renewed focus on Mr Osborne's insistence that the draconian cuts he is determined to deliver are necessary to prevent Britain's debt crisis spinning out of control.

It is not just Ed Balls, the Labour leadership candidate, who has been making a compelling case for why the Chancellor is going too far too fast – the International Monetary Fund said something very similar last week.



Divided on debt across the Atlantic

To give Mr Osborne his due, the polling evidence seems to suggest that public opinion at least is on his side on deficit reduction. A survey published by the BBC yesterday says six out of 10 people are in favour of cutting debt, though researchers don't seem to have asked by how much (and there is precious little consensus on where the axe should fall).

The most interesting thing about the BBC's poll is that its World Service arm has conducted similar research in 25 other countries – and come up with some markedly different results. Most noticeably, public opinion in the US is less solidly behind deficit reduction: 52 per cent of Americans prioritise it compared to 60 per cent here.

That different emphasis may explain why President Obama has again been talking about using government spending to stimulate the economy, using a Labor Day speech last night to unveil further details of his plans to pump $50bn into transport infrastructure.

Why the different moods in the US and the UK? One answer may be the issue of joblessness. The American labour market has not proved flexible enough to cope with the economic downturn and unemployment has risen to 10 per cent. In the UK, strategies such as short-time working and unprecedented pay restraint have kept unemployment at below 8 per cent and the figure is falling.

The question now is whether Britain can go on managing unemployment successfully while shedding large numbers of public sector workers, a process that official data reveals is only just beginning. If not, will people remain supportive of the Chancellor's deficit reduction plans?



Car sales are going nowhere for some time

In the context of all these fears, it is hardly surprising that people are less willing to spend thousands of pounds on a new car than they once were. Indeed, the surprise about the 17.5 per cent fall-off in new car registrations last month, compared to August 2009, is actually that the decline has not been worse.

Now that scrappage has bitten the dust, sales to private buyers have begun falling at an alarming rate – they were 38 per cent down in August. What has so far saved the motor industry from total relapse into the darkest days of the recession has been orders from corporate buyers. Having postponed the renewal of their fleets until the economic recovery began, companies have spent more on new cars this year than many analysts expected. The overall figures have thus been better than they might otherwise have been.

Let us hope this continues, for there is little prospect of an improvement in private sales any time soon. Every indicator of consumer confidence suggests households are becoming less likely by the day to sanction big ticket purchases. Yesterday's retail sales data – these figures have been surprisingly resilient in recent times – shows appetite for smaller purchases, too, may be starting to diminish.

At the current rate, total car sales in the UK this year are likely to be marginally ahead of 2009. But the last two months have been so disappointing that there is no certainty of beating last year. And with VAT due to rise to 20 per cent in January, a tax increase that is particularly noticeable on larger spending commitments, next year isn't looking too clever either.

We may have bemoaned the fact that scrappage gave such a boost to foreign motor manufacturers, but don't be surprised to hear misty-eyed calls for its return if the economic picture darkens in the months ahead.

News
scienceExcitement from alien hunters at 'evidence' of extraterrestrial life
Life and Style
Customers can get their caffeine fix on the move
food + drink
News
newsRyan Crighton goes in search of the capo dei capi
Extras
indybest

PROMOTED VIDEO
Arts and Entertainment
Actors front row from left, Jared Leto, Jennifer Lawrence, Meryl Streep, Ellen DeGeneres, Bradley Cooper, Peter Nyongío Jr., and, second row, from left, Channing Tatum, Julia Roberts, Kevin Spacey, Brad Pitt, Lupita Nyongío and Angelina Jolie as they pose for a
film
Sport
sport
Life and Style
techCould new invention save millions in healthcare bills?
Sport
David Moyes gets soaked
sport Moyes becomes latest manager to take part in the ALS challenge
Voices
A meteor streaks across the sky during the Perseid Meteor Shower at a wind farm near Bogdanci, south of Skopje, Macedonia, in the early hours of 13 August
voicesHagel and Dempsey were pure Hollywood. They only needed Tom Cruise, says Robert Fisk
News
peopleEnglishman managed quintessential Hollywood restaurant Chasen's
Life and Style
food + drinkHarrods launches gourmet food qualification for staff
Arts and Entertainment
Michael Flatley prepares to bid farewell to the West End stage
danceMichael Flatley hits West End for last time alongside Team GB World champion Alice Upcott
News
ebooksAn evocation of the conflict through the eyes of those who lived through it
Life and Style
Horst P Horst mid-fashion shoot in New York, 1949
fashionFar-reaching retrospective to celebrate Horst P Horst's six decades of creativity
News
Members and supporters of the lesbian, gay, bisexual, transgender (LGBT) community walk with a rainbow flag during a rally in July
i100
Life and Style
Black Ivory Coffee is made using beans plucked from elephants' waste after ingested by the animals
food + drinkFirm says it has created the "rarest" coffee in the world
Life and Style
news

As Voltaire once said, “Ice cream is exquisite. What a pity it isn’t illegal”

Life and Style
food + drinkThese simple recipes will have you refreshed within minutes
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Market Administrator (1st line Support, Bloomberg, Broker)

Negotiable: Harrington Starr: Market Administrator (1st line Support, Trade Fl...

Service Desk Analyst (Windows, Active Directory, ITIL, Reuter)

£35000 per annum: Harrington Starr: Service Desk Analyst (Windows, Active Dire...

Data Support Analyst (Linux, Solaris, Windows Server, Reuters)

Negotiable: Harrington Starr: Data Support Analyst (Linux, Solaris, Windows Se...

Helpdesk Support Engineer (Windows, MS Office, Exchange)

Negotiable: Harrington Starr: Helpdesk Support Engineer (Windows, MS Office, E...

Day In a Page

All this talk of an ‘apocalyptic’ threat is simply childish

Robert Fisk: All this talk of an ‘apocalyptic’ threat is simply childish

Chuck Hagel and Martin Dempsey were pure Hollywood. They only needed Tom Cruise
Mafia Dons: is the Camorra in control of the Granite City?

Mafia Dons: is the Camorra in control of the Granite City?

So claims an EU report which points to the Italian Mob’s alleged grip on everything from public works to property
Emmys look set to overhaul the Oscars as Hollywood’s prize draw

Emmys look set to overhaul the Oscars as Hollywood’s prize draw

Once the poor relation, the awards show now has the top stars and boasts the best drama
What happens to African migrants once they land in Italy during the summer?

What happens to migrants once they land in Italy?

Memphis Barker follows their trail through southern Europe
French connection: After 1,300 years, there’s a bridge to Mont Saint-Michel

French connection: After 1,300 years, there’s a bridge to Mont Saint-Michel

The ugly causeway is being dismantled, an elegant connection erected in its place. So everyone’s happy, right?
Frank Mugisha: Uganda's most outspoken gay rights activist on changing people's attitudes, coming out, and the threat of being attacked

Frank Mugisha: 'Coming out was a gradual process '

Uganda's most outspoken gay rights activist on changing people's attitudes, coming out, and the threat of being attacked
Radio 1 to hire 'YouTube-famous' vloggers to broadcast online

Radio 1’s new top ten

The ‘vloggers’ signed up to find twentysomething audience
David Abraham: Big ideas for the small screen

David Abraham: Big ideas for the small screen

A blistering attack on US influence on British television has lifted the savvy head of Channel 4 out of the shadows
Florence Knight's perfect picnic: Make the most of summer's last Bank Holiday weekend

Florence Knight's perfect picnic

Polpetto's head chef shares her favourite recipes from Iced Earl Grey tea to baked peaches, mascarpone & brown sugar meringues...
Horst P Horst: The fashion photography genius who inspired Madonna comes to the V&A

Horst P Horst comes to the V&A

The London's museum has delved into its archives to stage a far-reaching retrospective celebrating the photographer's six decades of creativity
Mark Hix recipes: Try our chef's summery soups for a real seasonal refresher

Mark Hix's summery soups

Soup isn’t just about comforting broths and steaming hot bowls...
Tim Sherwood column: 'It started as a three-horse race but turned into the Grand National'

Tim Sherwood column

I would have taken the Crystal Palace job if I’d been offered it soon after my interview... but the whole process dragged on so I had to pull out
Eden Hazard: Young, gifted... not yet perfect

Eden Hazard: Young, gifted... not yet perfect

Eden Hazard admits he is still below the level of Ronaldo and Messi but, after a breakthrough season, is ready to thrill Chelsea’s fans
Tim Howard: I’m an old dog. I don’t get too excited

Tim Howard: I’m an old dog. I don’t get too excited

The Everton and US goalkeeper was such a star at the World Cup that the President phoned to congratulate him... not that he knows what the fuss is all about
Match of the Day at 50: Show reminds us that even the most revered BBC institution may have a finite lifespan – thanks to the opposition

Tom Peck on Match of the Day at 50

The show reminds us that even the most revered BBC institution may have a finite lifespan – thanks to the opposition