The Treasury reports:
Chancellor George Osborne has confirmed that an emergency Budget will be held on Tuesday 22 June.
Speaking to journalists at the Treasury's offices in London, Mr Osborne said he wanted an emergency Budget that would "show that Britain can live within its means and...provide the solid foundation for a private sector recovery."
So, he's promoting a crisis when there isn't one and a solution that is not credible.
That's fiscal responsibility, Tory style.
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Right, lets not have a budget then – in fact, lets scrap all future budgets. That should avoid any crisis.
Most budgets aren’t described as “emergencies”
This one is not
That was my point
You appear not to have one apart from being trite
Make no mistake about it – this is a crisis. It is worse than 1979. If this isn’t a crisis – what is?
This “emergency” budget has been talked about for 2 years, after Darling delivered the last emergency budget in 2008. A lot of people feel that what we’ve seen of the public finances suggests that this is an emergency. Really this post’s point seems completely semantic and a little desperate. As you well know emergency budgets (which are literally any budgets not delivered on “Budget Day”, as I understand the term) aren’t uncommon.
I’ve been a long-term fan of your blog, but posts like these demonstrate your churlish and increasingly desperate polemic crystal ball side.
In fairness it should probably be an ‘extaordinary’ budget, rather than an emergency one but I fear the semantics won’t hugely effect the overall economic situation. Especially given the former Chief Secretary’s revelations…
A budget deficit of 11-12% is a crisis. The trajectory of government spending and tax receipts is unsustainable. Without adjustment, interest rates will rise doing far more damage to prospects for economic growth than reduced government expenditure which has crowded out the private sector.
As Liam Byrne has said, there is no money. Only what investors are prepared to lend to the government. Pity his attempt at humour will not be very funny for the people that are sacked from the public sector or who have to pay higher taxes (although that seems to be the mission of this blog).
@Richard Murphy
Disregarding the unfortunate typo in your post, can you really maintain, with a straight face, that Alistair Darling (or, more probably, Ed Balls) would not have had an ’emergency budget’ in very short order, had Labour either been elected with a majority or had concluded a coalition agreement with the Liberal Democrats? The public pretext might well have been the developing EU crisis, but the underlying causes would have been domestic.
The economy is in a pitiful state, and the March budget was clearly no more than a Elastoplast slapped on to tide the previous government through an election of which it had abandoned almost all hope of winning. There may be widespread disagreement about the best measures to be adopted, but (in asserting that Osborne “is promoting a crisis when there isn’t one”) you appear to be in a fractional minority of people maintaining that there is no crisis at all. The cross-party consensus is that there is, indeed, a crisis; I wonder why you feel confident that they are all mistaken.
What does Andrew mean by “there is no money”?
Of course there is money. Tax receipts flow into the government all the time. There are still means of increasing or decreasing these receipts, and borrowing is still an option.
So why the headless chicken syndrome from contributors here? One might start to think they all have an ideological axe to grind!
And ChrisB meakes an interesting point. If “emergency budgets” really are not uncommon, why is Britain singularly incapable of producing a rock solid budget with rock solid assumptions first time round? Something fundamental is wrong if we keep having to rewrite budgets (as opposed to simply updating forecasts).
Perhaps Britain’s adherence to many of the damaging economic orthodoxies of the last 30 years fatally undermines Britain’s ability to cope with financial and fiscal reality.
BenM
Well said
Richard
@BenM
“If “emergency budgets” really are not uncommon, why is Britain singularly incapable of producing a rock solid budget with rock solid assumptions first time round? Something fundamental is wrong if we keep having to rewrite budgets (as opposed to simply updating forecasts). ”
Er…because the last Labour budget was a nakedly political one.
@BenM – great post. “There is no money” as a literal statement is simply wrong. The problem is that there isn’t enough money flowing into the Exchequer’s coffers relative to what we’re spending. Funnily enough, it’s called a recession.
I agree that if borrowing were to rise unsustainably we’d be in trouble. Fortunately as Richard has set out in “The Great Tax Parachute” (linked from this blog), a combination of tax increases and judicious spending cuts (not crazy Jack Nicholson axe murderer spending cuts as we’re gonna see from Mr Osborne) can sort out the public finances without needing to resort to hand-wringing or hyperbole.
Osborne is deliberately turning a difficult situation into a full-blown crisis because he thinks that’s the best way to exploit the situation for later electoral gain. That’s understandable – he’s a politician, after all – but whether the electorate will let him get away with that I don’t know. My guess is that compared with the economic horrors that the coalition are about to unleash on us, New Labour will look relatively benign five years from now.
Well done for the textual analysis – very incisive. I can also confess that there is money after all, I have some in my wallet.
I also see Howard is falling for the Tory cuts = Jack Nicholson whereas Labour cuts would presumably be Disney and candy floss. The clarity of these arguments reminds me of Brown’s famous response to (I paraphrase) “What happened to no more boom and bust?”…..”I said no more Tory boom and bust”. Labour boom and bust being perfectly acceptable.
I am overwhelmed by the clarity and depth of thinking…..
@Andrew
Quite why you are equating the strategy set out in “The Great Tax Parachute” with Labour policy is beyond me… I’d be first in line to say that Brown got it terribly wrong with his claim to have abolished boom and bust.
Pleased that you agree that money does exist.