THE BUDGET: A briefcase full of hollow words

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The Independent Online
Promises promises ... that's what Chancellors of the Exchequer make on Budget day, and on Tuesday Kenneth Clarke will be no exception.

As on the three previous occasions when he has stood at the despatch box with the famous battered briefcase, Mr Clarke will be making pledges to the electorate about the future course of the economy which he hopes will be borne out by events. On the whole, Mr Clarke has been lucky (or skilful). His predecessors, however, have not quite had his touch.

In his first Budget (the first November one) in 1993, Mr Clarke promised "to put Britain on course for a sustained period of rising prosperity and falling unemployment, based on low inflation and healthy public finances". Growth averaged 3.85 per cent in 1994; unemployment averaged 9.3 per cent, down from 10.3 per cent the year before; inflation for 1994 was 2.4 per cent, and public borrowing for 1994-95 was pounds 35.9bn, a pounds 10bn improvement.

Not bad; and it has to be said, he didn't do badly in his predictions in 1994 ("to keep the economy on track" - he more or less did) and last year ("to make Britain the enterprise centre of Europe" - well, we might have the highest growth in Europe for the moment).

But turn back history's pages a year or two, and what have we here? Norman Lamont is what we have here, promising (on 10 March 1992) "a Budget for the recovery". Oh dear. Growth that year was -0.5 per cent. He also promised to keep the economy "within the convergence criteria of the exchange-rate mechanism". Six months later, on Black Wednesday, Britain and the ERM had parted company.

The year before, Mr Lamont did even worse. He promised a Budget that would be "good for business, good for families, good for charge-payers and good for the country". Growth in 1991 averaged -2.65 per cent.

The year before that, John Major's year as Chancellor, he said (20 March 1990) his main objective was to bring inflation down. Nice try, Mr Major. A few months later inflation, which the Government told us had been conquered, hit double figures, averaging 9.5 per cent for the year.

But it is with Nigel Lawson that we reach the greatest disparity between promises and out-turns of the last decade. On 17 March 1987 he forecast "a year of balanced growth with low inflation" - and the economy exploded. Growth for the year averaged 4.75 per cent and inflation took off, averaging 4.2 per cent over the year.

In his famous 1988 Budget, when he cut the top tax rate to 40 per cent and pumped even more demand into an economy that was overheating, he promised "a year of healthy growth with low inflation".

Growth was no more healthy than it was balanced the year before - it averaged an unsustainable 4.5 per cent, and inflation rose to nearly 5 per cent. The Lawson boom ushered in the 1990s' recession.

It's worth remembering on Tuesday, when that confident Mr Clarke gives us his spiel, that Nigel Lawson was confident in 1988 too.