The Budget did nothing to address ‘secular stagnation’ – yet still we dance to Osborne’s tune

On the one hand, George Osborne’s final budget before the election demonstrates that budgets really matter. As snappy as Ed Miliband’s response was, the Labour opposition cannot possibly compete with this unique platform for the government of the day to show voters, in a tangible way, what ‘five more years’ of Conservative government might do for them (I think the Liberal Democrat influence can be discounted at this stage – they seem to have entirely given up the ghost).

As such, Osborne once again turned to some of his favourite tricks. The housing market will be stoked by a new ISA for first-time buyers, through which the government will help people save for a deposit. The housing market (particularly buy-to-let is also likely to be the destination of the cash people will get from being able to sell their annuities, the latest absurd twist in the coalition’s pensions liberation fantasy).

The income tax personal allowance will rise again – presented as a tax cut for low-earners, but mostly benefiting well-off households. There was more good tax news for the already affluent: the threshold for the 40p income tax band will rise above inflation. There were also measures designed to further Osborne’s Northern Powerhouse narrative, chiefly allowing Greater Manchester councils to retain more of their business rates revenue. And he’s once again watered down austerity, with some clever fiddling with the public finances, helped by the knock-in impact of very low inflation (which is actually a bad thing).

In short, Osborne has introduced an array of measures designed to both curry favour among his own supporters and take the sting out of Labour attack lines. In the process, he has, in my view, continued to play fast and loose with the British economy, refusing to address or even intensifying the kind of problems that caused the financial crisis and subsequent severe recession.

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Image: Chingster23