This is, if you want it, another review of the Autumn Statement. Osborne is giving away £6.2 bn more next year, half on tax credits. It is a slight anti-austerity move. His basis for so doing is an Office for Budget Responsibility forecast of a £2.9bn improvement in tax receipts. £6.2 is more than twice £2.9, but they are small amounts in the bigger scheme of things. The key question is the forecast which is of 2.4% growth for the next three years or so. There are problems with this.
1. The OBR’s forecasts on exports and the overall trade position look very optimistic both in terms of external demand for our exports and our ability to increase them.
2. We depend on incoming investment. That could reverse.
3. There is a vast amount of personal debt. Sooner or later it will tighten consumption.
4. It assumes the South-East bubble will not burst, but quite a lot of that bubble is speculative.
5. It seems not to factor in the effects of BofE base rate rises for all this Parliament.
6.It does not address the disarray and understaffing of HMRC.
7. It assumes stability in the banking sector.
If growth falls (it is nearly zero in real terms now) the deficit will not fall much (which does not matter a great deal as it would not under Labour)
The underlying reality (obscured by Osborne’s theatricals) is that the whole economy is geared towards the rich in the South-East and is draining the ability of young, poor people to live and work properly. The trend towards selling off the family silver continues. Over £1 trillion of public assets have been sold off cheaply, mainly to the rich, over the last few decades and now we owe hospitals, schools and houses to the private finance sector.
It is worrying that the move towards stronger Council Tax will protect propertied areas and impoverish further the already poor areas.