All these latter changes are predicated upon a strong recovery of the British economy over a two- to three-year time horizon. Yet who can have confidence in the projections of the Treasury, when both their forecasts and their method of analysing the economy are discredited?
The enormous amount of attention paid to the Budget distracts from the fact that it is essentially an exercise in short-term bookkeeping by the Treasury. The process obscures rather than illuminates the fundamental problems faced by the British economy.
The Budget devotes little or no attention to these problems. The balance of payments is in serious deficit, at a time of the deepest recession since the 1930s. The Government is belatedly recognising the importance of manufacturing to the economy, and in particular its contribution to our trade, yet no policy is in place to promote the health of this vital sector. The size of Britain's manufacturing capital stock is simply too small, and as a matter of urgency investment must be increased.
The financial balance sheets of the banking and personal sectors remain in a serious state. No sustained recovery will be possible with these financial constraints. In the November 1992 public expenditure White Paper, the Government took a step to the socialisation of bad debts by committing pounds 750m to purchase of properties. This should be repeated on a much larger scale, not for its impact on demand, but for its impact on the asset positions of key sectors of the economy.
Overall, the Budget lacks any serious vision and any serious appreciation of the potential scale of our problems.
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