By the time Chancellor John Healey stands up to deliver the Budget next week, we will have been told repeatedly that he faces a fiscal “black hole”, that higher borrowing costs have eaten into his “headroom”, and that the financial markets will punish any departure from fiscal discipline. Debate will concentrate on what the Office for Budget Responsibility forecasts for future deficits; rather less attention will be paid to whether his decisions make economic sense.
Britain has expensive debt, inadequate public services and a prolonged productivity problem, while ageing and rising demand for healthcare will put further pressure on spending. A serious Budget would explain how the government intends to address those problems together, including who will pay, what it expects reform to achieve, and how long that will take.