A clear message and signs of green shoots
“The Chancellor’s green tie was symbolic. He didn’t say it but the green shoots of economic recovery are here.
The OBR has revised its growth estimates upwards. Public sector net borrowing will be in surplus in 2018-19. 1.4 million private sector jobs have been created. However, Osborne made it clear that the job was far from done.
He made a significant economic and political move by announcing that the coalition would set out a new fiscal rules framework to ensure that debt continues to fall as a percentage of GDP.
As a Policy Exchange paper outlined recently, the UK’s debt-GDP is currently projected to exceed 100% of GDP by 2015, the highest level since modern records began. Without a new set of fiscal rules binding governments to strict fiscal commitments, deeper recessions, tax rises and greater spending cuts may become a long lasting fixture for the UK.
It was also pleasing to see the Chancellor address the issue of housing. Councils will now be required to sell off expensive council housing when it becomes vacant. Policy Exchange found that such sales could raise £4.5 billion annually which could be used to build 80,000-170,000 new social homes a year and create 160,000-340,000 jobs.
It would be good to see the government focus more effort on getting Britain building, including the creation of at least one garden city, but this was a good start.
There were other policies addressing the cost of living crisis including a freeze on business rates and fuel duty as well as a small but popular pledge to give £100million in Libor bank fines to military charities.
But this was a macro-economic speech. The message was clear. Britain will be in the black before the end of the next Parliament if you stick with us. Don’t hand the keys back to the guys who crashed the car.”