Ian Stewart, Chief Economist at Deloitte, comments on today’s Budget
21 March 2013
“The halving of the official growth forecast for this year left the Chancellor with a tough hand to play in today’s Budget. The official forecast for growth in 2013, at 0.6%, is even more pessimistic than the average economist.
“Weaker growth means that Mr Osborne will make even slower progress in his goal of eliminating the government deficit. The Treasury now forecasts that public borrowing will be £55 billion or 16% higher over the next five years.
“But the Chancellor has deftly used his limited room for manoeuvre to boost the private sector - through a further cut in the main rate of Corporation Tax, a £3 billion boost to infrastructure, measures to help homebuyers and a new £10,000 personal allowance.
“The most significant announcement today was on the role of monetary policy. The Chancellor has given the incoming Governor of the Bank of England, Mark Carney, the green light to pursue more expansionary monetary policy. Mr Osborne’s statement that “monetary activism” is at the heart of his strategy signals that the Chancellor is looking to the Bank to play a bigger role in getting growth going.
“Mr Osborne has resisted calls to ease the pace of public sector austerity and is sticking with his Plan A. The Chancellor’s strategy is to use supply side reform and easier monetary policy to kick start private sector growth.”
Notes to editors:
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