In tomorrow’s Budget, George Osborne should prioritise the poor, avoid gimmickry and move to rebalance growth

There will be few fireworks, but this could Budget could be Osborne's most decisive yet


The Budget that George Osborne will present to Parliament tomorrow is, in effect, the Coalition’s last. Next year’s financial statement, less than two months before the May general election, will be a purely political affair. After five years of compromise, the Chancellor will use the occasion to present voters with an unashamedly Tory vision (contingent on a majority win at the ballot box, of course), hung with as many baubles as he can muster. This year, however, the Chancellor has neither the means nor the freedom to deviate from the current course.

The good news is the economy is assuredly on the up. The 2013 Budget was delivered amid warnings of an impending slide back into recession. Since then, we have had four consecutive quarters of expansion and, by the end of 2014, GDP is expected – finally – to recover to pre-crash levels. That said, it is too soon to be sure of consistent growth to come and too soon for the parlous public finances to be seeing much benefit. Indeed, with a deficit still running at more than £100bn, Mr Osborne cannot present plans tomorrow that are anything but scrupulously fiscally neutral without facing charges of hypocrisy, if not recklessness. Yet this limited room for manoeuvre comes with a political upside. The Chancellor can stick with his familiar refrain about the plan working but there being a long way to go – for which, read: we are fixing things, but it is not yet safe to let the other lot in.

Politically, Mr Osborne has little more wriggle room. While he has tried to blank the Opposition rhetoric about a “cost of living crisis”, the fact remains that swathes of the electorate have seen their spending power at best stagnate since 2007. Nor is the pressure all from the left. Recent weeks have seen perennial Tory support for tax cuts become public demands for the threshold of the 40p band to be raised to take the pressure off the squeezed middle classes.

The Chancellor – rightly – judged that, against a backdrop of continuing austerity, the prospect of a tax cut at the upper end would be politically impossible. Instead, then, tomorrow’s Budget will pledge to raise the personal allowance to £10,500, a move – albeit one for which the Liberal Democrats can claim most of the credit – Mr Osborne hopes will undermine Labour claims that the Tories are the party of the rich.

Tweaks to taxes and twitches to duties on, say, beer may draw the most attention, along with eye-catching, if pre-announced, plans for a new garden city and an extension of the Help to Buy scheme. But it is elsewhere that Mr Osborne’s central challenge lies. His position may be as constrained as it has ever been, but this Budget is also his last chance to have an impact before an election at which his party needs a positive economic story even more than most. And for all the rosier outlook, the character of recent improvements is far from certain.

Despite much talk of rebalancing, the engine of growth remains domestic demand, itself reliant on a roaring housing market. Exports are disappointing, investment levels are up but are still weaker than hoped, and the “productivity conundrum” foxing economists studying Britain’s statistics suggests that capacity for future growth may be limited. As such, there will be few fireworks from Mr Osborne tomorrow, but it could still be his most decisive Budget yet.

React Now

Latest stories from i100
iJobs Job Widget
iJobs General

Recruitment Genius: SAGE Bookkeeper & PA to Directors

£18000 - £24000 per annum: Recruitment Genius: An exciting opportunity has ari...

Recruitment Genius: Online Sales and Customer Services Executive

£15000 - £18000 per annum: Recruitment Genius: An On-line Sales & Customer Ser...

Recruitment Genius: Accounts Assistant - Fixed Term Contract - 6 Months

£15000 per annum: Recruitment Genius: One of the largest hospitality companies...

Recruitment Genius: Electricians - Fixed Wire Testing

£28000 - £32000 per annum: Recruitment Genius: As a result of significant cont...

Day In a Page

Read Next
Neo-Nazis march in London  

I'm taking my Jewish kids to a vile neo-Nazi rally in London this weekend because I want them to learn about free speech

Richard Ferrer
A police officer carries a casualty to safety  

Tunisia attack proves that we cannot stop terrorists carrying out operations against Britons in Muslim countries

Robert Verkaik
Seifeddine Rezgui: What motivated a shy student to kill 38 holidaymakers in Tunisia?

Making of a killer

What motivated a shy student to kill 38 holidaymakers in Tunisia?
UK Heatwave: Temperatures on the tube are going to exceed the legal limit for transporting cattle

Just when you thought your commute couldn't get any worse...

Heatwave will see temperatures on the Tube exceed legal limit for transporting cattle
Exclusive - The Real Stories of Migrant Britain: Swapping Bucharest for London

The Real Stories of Migrant Britain

Meet the man who swapped Romania for the UK in a bid to provide for his family, only to discover that the home he left behind wasn't quite what it seemed
Cheaper energy on the way, but it's not all sunshine and rainbows

Cheaper energy on the way, but it's not all sunshine and rainbows

Solar power will help bring down electricity prices over the next five years, according to a new report. But it’s cheap imports of ‘dirty power’ that will lower them the most
Katy Perry prevented from buying California convent for $14.5m after nuns sell to local businesswoman instead

No grace of God for Katy Perry as sisters act to stop her buying convent

Archdiocese sues nuns who turned down star’s $14.5m because they don’t approve of her
Ajmer: The ancient Indian metropolis chosen to be a 'smart city' where residents would just be happy to have power and running water

Residents just want water and power in a city chosen to be a ‘smart’ metropolis

The Indian Government has launched an ambitious plan to transform 100 of its crumbling cities
Michael Fassbender in 'Macbeth': The Scottish play on film, from Welles to Cheggers

Something wicked?

Films of Macbeth don’t always end well - just ask Orson Welles... and Keith Chegwin
10 best sun creams for body

10 best sun creams for body

Make sure you’re protected from head to toe in the heatwave
Wimbledon 2015: Nick Bollettieri - Milos Raonic has ability to get to the top but he must learn to handle pressure in big games

Nick Bollettieri's Wimbledon files

Milos Raonic has ability to get to the top but he must learn to handle pressure in big games
Women's World Cup 2015: How England's semi-final success could do wonders for both sexes

There is more than a shiny trophy to be won by England’s World Cup women

The success of the decidedly non-famous females wearing the Three Lions could do wonders for a ‘man’s game’ riddled with cynicism and greed
How to stop an asteroid hitting Earth: Would people co-operate to face down a global peril?

How to stop an asteroid hitting Earth

Would people cooperate to face a global peril?
Just one day to find €1.6bn: Greece edges nearer euro exit

One day to find €1.6bn

Greece is edging inexorably towards an exit from the euro
New 'Iron Man' augmented reality technology could help surgeons and firefighters, say scientists

'Iron Man' augmented reality technology could become reality

Holographic projections would provide extra information on objects in a person's visual field in real time
Sugary drinks 'are killing 184,000 adults around the world every year'

Sugary drinks are killing 184,000 adults around the world every year

The drinks that should be eliminated from people's diets
Pride of Place: Historians map out untold LGBT histories of locations throughout UK

Historians map out untold LGBT histories

Public are being asked to help improve the map