I was impressed by Alistair Darling’s budget on Wednesday. Politically, it was hard to fault. Economically, he played it safe and didn’t upset the markets.
Evidently the Budget deficit needs to be tackled. Otherwise the credit ratings agencies will become tetchy and credit will be harder to come by. The big question is: how soon should the deficit be reduced? Are savage cuts the way forward? Or do we simply need to make a start? The main parties are divided on the issue and so are economists. But the political gap has closed a bit. Nick Clegg is no longer calling for savage cuts and the Conservatives’ tone was much more hawkish several months ago.
The government plans to halve the deficit in four years, despite European Commission encouragement to act quicker. Their argument is that to cut quicker would harm the economy still further.
There were no great economic revelations in the Budget. The big decisions, the painful ones especially, will come later. That political judgement was straightforward. But aside from that, Mr Darling played a dextrous hand.
Among his cards, the decision to grant a two year stamp duty holiday to first-time buyers of homes up to £250,000 (neglecting a nod of courtesy to the opposite benches for the idea). It’s paid for by an increase in stamp duty on £1m homes. Not for two years, but permanently. I can’t imagine this will cost Labour too many votes.
And this one’s inspirational: a tiny increase on a pint of beer (2%) alongside a much larger increase in cider (10% above inflation). Beer drinkers will feel they got off lightly. Who do beer drinkers vote for? Probably any and every party (though traditionally Labour!) Meanwhile, who do cider drinkers vote for? Here’s a clue: