Budget predictions: Chancellor will have to play balancing act
Nigel Pickard, partner and head of tax at professional services firm Deloitte in Birmingham, believes the Chancellor will look to boost business activity by bringing forward public sector spending plans.
Any hopes that this Budget might deliver a significant boost to the economy have probably been dashed by further deterioration in the UK’s public finances and the general swing in opinion against the wisdom of a major fiscal stimulus. But that doesn’t mean that it will be a complete non-event.
After all, it is almost unimaginable that the Chancellor will stand by and do nothing in response to the continued weakness of the economy.
So just what measures might Mr Darling announce and what impact might they have on the economy?
For a start, we suspect that he will still feel able to make a small net giveaway in the next year or two, perhaps of the order of £5 billion to £10 billion.
Secondly, even within tight fiscal constraints, the Chancellor can attempt to boost the overall level of activity by redistributing spending power to those parts of the economy most likely to utilise it.
And further ahead, Mr Darling is likely to put in place some measures to try to bring borrowing back down over the medium-term.
