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Wednesday, 22 February 2012

Osborne’s lucky escape on the deficit. Ed Balls, eat your heart out!

As much as I detest all three main parties, the following pleased me, if only to see Ed Balls reaction!

FOR once, and I can barely believe that I’m writing this, George Osborne has reason to be happy. The budget deficit for this fiscal year to date (April 2011-January 2012) was a still horrendous, Greek-style £93.5bn, but this was down £15.6bn from a year earlier, a very non-Greek development. This is a much better performance than expected by the Office for Budget Responsibility (OBR): it was hoping for a decline of just £9bn for the whole year (from £135.8bn in 2010-11). Unless the situation worsens drastically over the next two months, it looks as if Osborne’s deficit reduction plans have moved slightly ahead of target. 
Even better was the reason for this improvement: spending is growing in cash terms at a slower rate, and falling faster in real terms. Central government current spending has risen by just 1.6 per cent so far this fiscal year, versus a forecast of a 3.1 per cent rise over the full year. Local authority finances were also better than expected. Perhaps less happily, spending on capital projects is also falling faster than expected, something worth remembering next time a government minister claims that infrastructure projects are being protected. 

Ever mindful of copyright, I'm afraid you are going to have to go to Allister's website to read the rest of the article, but if you are interested in our economy, it's worth the read.


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