Outlook: Things couldn't be better for Brown

IT IS an unlikely position for a Labour Chancellor. Gordon Brown delivers his Budget speech next Tuesday with the public finances in better shape than for more than 10 years. The likely out-turn for this fiscal year is a budget surplus of around pounds 8bn. Not since the 1960s has a Labour Chancellor been able to balance the books in this way.

Furthermore, the immediate outlook is for better still. From 1 April, the Inland Revenue begins the process of switching to quarterly payments of corporation tax. The effect of this will be to give the Chancellor a one-off cash-flow benefit of pounds 1.5bn in the first year, rising to pounds 5bn over five years. Also already announced for next financial year, there's an extra pounds 1.5bn from the phased abolition of tax credits on dividends, pounds 1bn from the abolition of profit-related pay, and pounds 1.5bn in extra excise duties.

There is, of course, another side to the balance sheet - government spending. One of the reasons for the present buoyancy in the figures is that, inexplicably, government spending is coming in lower than forecast. That cannot last, and in any case, announced extra spending on health and education begins to kick in with a vengeance from next fiscal year onwards. All the same, it is looking more and more possible that the Chancellor will be able to maintain a budget surplus right through the very worse that the present downturn in the business cycle has to throw at him.

By any stretch, this is a truly remarkable state of affairs. The general assumption in the City is that the overall fiscal stance of the Budget will be neutral, though the Monetary Policy Committee's decision to leave interest rates unchanged, taken this week with prior knowledge of the broad fiscal outline of the budget, might suggest otherwise. Even so, it is plain that whatever giveaway might be forthcoming, it is not going to be a significant one. The fiscal cannon is recharged, but for the time being, the Chancellor is not tempted to fire it.

The cynical view, as well as the almost certainly correct one, is that the Chancellor is simply waiting for the run-up to the next election, when voters will be pump-primed in the traditional manner. But actually there is no urgent need, as things stand, to provide the economy with a fresh fiscal stimulus. Perhaps surprisingly, though not to readers of this column, Britain looks as if will avoid a fully fledged recession - as defined by two consecutive quarters of negative growth.

The good news from the US yesterday was that the American economic miracle continues unabated. Despite the booming economy and tight labour market, wage pressure remains in abeyance. There's no sign of inflation and therefore no immediate need for the Federal Reserve to raise interest rates. No wonder President Clinton survived the Monica Lewinsky affair. For an explanation of why he remains one of the most popular presidents in US history, look no further than the Dow at 9,665.

Start your day with The Independent, sign up for daily news emails
A boy holds a chick during the Russian National Agricultural Exhibition Golden Autumn 2014 in Moscow on October 9, 2014.
Life and Style
love + sex
Ashley Young celebrates the winner for Manchester United against Newcastle
footballNewcastle v United 1 player ratings
Arts and Entertainment
Victoria Wood, Kayvan Novak, Alexa Chung, Chris Moyles
tvReview: No soggy bottoms, but plenty of other baking disasters on The Great Comic Relief Bake Off
Ashley Young celebrates the winner for Manchester United against Newcastle
footballNewcastle 0 Man United 1: Last minute strike seals precious victory
ebooksA special investigation by Andy McSmith
Life and Style
Tikka Masala has been overtaken by Jalfrezi as the nation's most popular curry
food + drink
Arts and Entertainment
Seth Rogan is one of America’s most famous pot smokers
filmAmy Pascal resigned after her personal emails were leaked following a cyber-attack sparked by the actor's film The Interview
Benjamin Netanyahu and his cartoon bomb – the Israeli PM shows his ‘evidence’
Arts and Entertainment
80s trailblazer: comedian Tracey Ullman
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

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

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Graduate Application Support Analyst

£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

Reach Volunteering: External Finance Trustee Needed!

Voluntary post, reasonable expenses reimbursed: Reach Volunteering: Would you ...

Christine McCleave: FP&A Analyst

£36,000 - £40,000: Christine McCleave: Are you looking for a new opportunity a...

Recruitment Genius: Sales Executive - OTE £40,000

£15000 - £18000 per annum: Recruitment Genius: This is a great opportunity for...

Day In a Page

War with Isis: Iraq's government fights to win back Tikrit from militants - but then what?

Baghdad fights to win back Tikrit from Isis – but then what?

Patrick Cockburn reports from Kirkuk on a conflict which sectarianism has made intractable
Living with Alzheimer's: What is it really like to be diagnosed with early-onset dementia?

What is it like to live with Alzheimer's?

Depicting early-onset Alzheimer's, the film 'Still Alice' had a profound effect on Joy Watson, who lives with the illness. She tells Kate Hilpern how she's coped with the diagnosis
The Internet of Things: Meet the British salesman who gave real-world items a virtual life

Setting in motion the Internet of Things

British salesman Kevin Ashton gave real-world items a virtual life
Election 2015: Latest polling reveals Tories and Labour on course to win the same number of seats - with the SNP holding the balance of power

Election 2015: A dead heat between Mr Bean and Dick Dastardly!

Lord Ashcroft reveals latest polling – and which character voters associate with each leader
Audiences queue up for 'true stories told live' as cult competition The Moth goes global

Cult competition The Moth goes global

The non-profit 'slam storytelling' competition was founded in 1997 by the novelist George Dawes Green and has seen Malcolm Gladwell, Salman Rushdie and Molly Ringwald all take their turn at the mic
Pakistani women come out fighting: A hard-hitting play focuses on female Muslim boxers

Pakistani women come out fighting

Hard-hitting new play 'No Guts, No Heart, No Glory' focuses on female Muslim boxers
Leonora Carrington transcended her stolid background to become an avant garde star

Surreal deal: Leonora Carrington

The artist transcended her stolid background to become an avant garde star
LGBT History Month: Pupils discuss topics from Sappho to same-sex marriage

Education: LGBT History Month

Pupils have been discussing topics from Sappho to same-sex marriage
11 best gel eyeliners

Go bold this season: 11 best gel eyeliners

Use an ink pot eyeliner to go bold on the eyes with this season's feline flicked winged liner
Cricket World Cup 2015: Tournament runs riot to make the event more hit than miss...

Cricket World Cup runs riot to make the event more hit than miss...

The tournament has reached its halfway mark and scores of 300 and amazing catches abound. One thing never changes, though – everyone loves beating England
Katarina Johnson-Thompson: Heptathlete ready to jump at first major title

Katarina Johnson-Thompson: Ready to jump at first major title

After her 2014 was ruined by injury, 21-year-old Briton is leading pentathlete going into this week’s European Indoors. Now she intends to turn form into gold
Syrian conflict is the world's first 'climate change war', say scientists, but it won't be the last one

Climate change key in Syrian conflict

And it will trigger more war in future
How I outwitted the Gestapo

How I outwitted the Gestapo

My life as a Jew in wartime Berlin
The nation's favourite animal revealed

The nation's favourite animal revealed

Women like cuddly creatures whilst men like creepy-crawlies
Is this the way to get young people to vote?

Getting young people to vote

From #VOTESELFISH to Bite the Ballot