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.

Teeth should be brushed twice a day to prevent tooth decay
Bryan Cranston as Walter White, in the acclaimed series 'Breaking Bad'
footballChelsea 6 Maribor 0: Blues warm up for Premier League showdown with stroll in Champions League - but Mourinho is short of strikers
Those who were encouraged to walk in a happy manner remembered less negative words
Arts and Entertainment
Princess Olga in 'You Can't Get the Staff'
tvReview: The anachronistic aristocrats, it seemed, were just happy to have some attention
Renee Zellweger as Bridget Jones
ebooksAn unforgettable anthology of contemporary reportage
Life and Style

Board creates magnetic field to achieve lift

There have been various incidents of social media users inadvertently flouting the law

Life and Style
Stack ‘em high?: quantity doesn’t always trump quality, as Friends of the Earth can testify
techThe proliferation of online petitions allows us to register our protests at the touch of a button. But do they change anything?
Bourgogne wine maker Laboure-Roi vice president Thibault Garin (L) offers the company's 2013 Beaujolais Nouveau wine to the guest in the wine spa at the Hakone Yunessun spa resort facilities in Hakone town, Kanagawa prefecture, some 100-kilometre west of Tokyo
CSKA Moscow celebrate after equalising with a late penalty
footballCSKA Moscow 2 Manchester City 2: Premier League champions let two goal lead slip in Russia
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

Helpdesk Analyst

£23000 per annum + pension and 22 days holiday: Ashdown Group: An established ...

Senior Helpdesk Analyst / Service Desk Co-ordinator

£27000 per annum + pension, 22 days holiday: Ashdown Group: An established ind...

Senior Pensions Administrator

£23000 - £26000 Per Annum: Clearwater People Solutions Ltd: Our client is curr...

Corporate Actions Administrator / Operations Administrator

£25 - 30k: Guru Careers: A Corporate Actions Administrator / Operations Admini...

Day In a Page

Indiana serial killer? Man arrested for murdering teenage prostitute confesses to six other murders - and police fear there could be many more

A new American serial killer?

Police fear man arrested for murder of teen prostitute could be responsible for killing spree dating back 20 years
Sweetie, the fake 10-year-old girl designed to catch online predators, claims her first scalp

Sting to trap paedophiles may not carry weight in UK courts

Computer image of ‘Sweetie’ represented entrapment, experts say
Fukushima nuclear crisis: Evacuees still stuck in cramped emergency housing three years on - and may never return home

Return to Fukushima – a land they will never call home again

Evacuees still stuck in cramped emergency housing three years on from nuclear disaster
Wildlife Photographer of the Year: Intimate image of resting lions claims top prize

Wildlife Photographer of the Year

Intimate image of resting lions claims top prize
Online petitions: Sign here to change the world

Want to change the world? Just sign here

The proliferation of online petitions allows us to register our protests at the touch of a button. But do they change anything?
Ed Sheeran hits back after being labelled too boring to headline festivals

'You need me, I don’t need you'

Ed Sheeran hits back after being labelled too boring to headline festivals
How to Get Away with Murder: Shonda Rhimes reinvents the legal drama

How to Get Away with Murder

Shonda Rhimes reinvents the legal drama
A cup of tea is every worker's right

Hard to swallow

Three hospitals in Leicester have banned their staff from drinking tea and coffee in public areas. Christopher Hirst explains why he thinks that a cuppa is every worker's right
Which animals are nearly extinct?

Which animals are nearly extinct?

Conservationists in Kenya are in mourning after the death of a white northern rhino, which has left the species with a single male. These are the other species on the brink
12 best children's shoes

Perfect for leaf-kicking: 12 best children's shoes

Find footwear perfect to keep kids' feet protected this autumn
Anderlecht vs Arsenal: Gunners' ray of light Aaron Ramsey shines again

Arsenal’s ray of light ready to shine again

Aaron Ramsey’s injury record has prompted a club investigation. For now, the midfielder is just happy to be fit to face Anderlecht in the Champions League
Comment: David Moyes' show of sensitivity thrown back in his face by former Manchester United manager Sir Alex Ferguson

Moyes’ show of sensitivity thrown back in his face... by Ferguson

Manchester United legend tramples on successor who resisted criticising his inheritance
Two super-sized ships have cruised into British waters, but how big can these behemoths get?

Super-sized ships: How big can they get?

Two of the largest vessels in the world cruised into UK waters last week
British doctors on brink of 'cure' for paralysis with spinal cord treatment

British doctors on brink of cure for paralysis

Sufferers can now be offered the possibility of cure thanks to a revolutionary implant of regenerative cells
Ranked seventh in world’s best tourist cities - not London, or Edinburgh, but Salisbury

Lonely Planet’s Best in Travel 2015

UK city beats Vienna, Paris and New York to be ranked seventh in world’s best tourist destinations - but it's not London