The pre-Budget report was delivered by Alistair Darling in his customary hypnotic monotone. Darling is now such a master of mind-numbingly boring declamation that you almost fail to appreciate how truly awful is the state of the British economy:
Because of the severity of the recession, my forecast for this year’s borrowing is £178 billion. Next year it will fall to £176 billion. As the economy recovers and the deficit reduction plan starts to take effect, it will fall to £140 billion and then to £117 billion, and will reach £96 billion in 2013–14—a slightly lower level than I forecast in April—before falling to £82 billion in 2014–15. As a share of GDP, borrowing will be 12.6 per cent. this year, 12 per cent. next year, then 9.1 per cent, then 7.1 per cent., and 5.5 per cent. in 2013–14. It will fall to 4.4 per cent. in 2014–15. If we exclude public sector investment, or capital spending, and take the economic cycle into account, the budget deficit is expected to fall to 1.9 per cent. at the end of the forecast period.
And so it went on, one grim statistic after another.
The eye-catching measures – well trailed – were the windfall tax on bankers’ bonuses and the freezing of inheritance tax thresholds, all part of Labour’s core vote strategy of being seen to punish the City fat cats and the landed toffs.
Yet drill down in the PBR and you will see that the real targets of Labour’s attack are the middle-income coping classes. In 2011, national insurance contributions of both employers and employees earning over £20,000 will be increased by a further 0.5 per cent – a tax both on jobs and on moderate earners.
Labour’s tax increases amount in total to about £7.8 billion, or £370 per annum more per family – all postponed, of course, until after the general election.
So today’s PBR was indeed a declaration of war. But, so far as Labour are concerned, the real enemy are the aspirational middle classes. New Labour really is dead.
It is simplistic I suppose to think this way but I cannot help myself~
If I borrowed £178 billion this year and £176 billion next year, the fact that I had borrowed two billion less next year would not really be a success story, I would still owe a mind numbing amount of money and have to pay interest on the debt.
The money also still has to be repaid.
The Labour Government has sold off a great deal of our gold at the lowest price they could possibly have got for it and borrowed to spend and would have squandered the Crown Jewels if they could have got their hands on them.
This is a disaster story that even Spielberg could not have imagined.