Budget 2013: Osborne's 'small beer' fails experts' taste test

Economists, businesses and unions are overwhelmingly damning – the chancellor is fiddling while Britain flatlines

David Blanchflower, professor of economics at Dartmouth College, New Hampshire

So, the OBR [Office for Budget Responsibility] halved its forecast for growth in 2013, to 0.6%, down from the 1.2% it forecast in December and 2.9% it forecast in November 2010. The OBR says that "weaker receipts halt the fall in the deficit" so debt, as percentage of GDP, will now not fall until 2017-18: two years later than Osborne had predicted when he came to office, in May 2010.

The downgraded chancellor did not do enough to turn the economy around in this fiddling-at-the-edges, fiscally neutral budget.

The new employment allowance in 2014, though, is a good idea but too little, too late on the day the ONS [Office for National Statistics] revealed that real earnings are falling at around 2% per annum. Where was the extra infrastructure spending? Same old same-old.

Lee Hopley, chief economist at EEF, the manufacturers' organisation

The OBR confirmed the economy isn't getting any bigger any quicker, and the deficit is taking longer to come down. Despite this context, the chancellor made a raft of announcements targeted at almost everyone. A little for everyone is one strategy, but there are economic questions about whether reprioritised resources were focused sufficiently on growth.

Actions on the headline rate of corporation tax, the R&D tax credit, innovation schemes and growth vouchers were enough to label this business friendly. But business investment growth is again going to come in weaker than expected, making the path to better balanced growth an uphill one. The mix of initiatives in this budget really needed to be tilted much more on those that would deliver bigger growth dividends.

Next stop for bold decisions: the spending review.

Mark Littlewood, director general, Institute of Economic Affairs

This is [a] fiddly, tinkering and uninspiring budget with few crumbs of comfort. The centrepiece of the chancellor's strategy was to eliminate the budget deficit over the course of this parliament – but he is overspending by about £120bn every year, and there is little prospect of that coming down any time soon.

George Osborne deserves a cheer for reducing corporation tax, halting the fuel duty rise and knocking a penny off beer. But that isn't a recipe to supercharge economic growth.

Elsewhere, there are a bewildering number of new tax reliefs and exemptions, which will make the UK's impenetrable tax code still more complicated.

The coalition should have been much bolder in reducing spending from the outset. Having failed to do so, this has ended up being a very flat budget for a flatlining economy.

Frances O'Grady, general secretary, Trades Union Congress

The chancellor started by reeling off reasons for a new economic plan – growth halved, borrowing up, and no more progress on the deficit until 2014 – and then offered up more of the same old failed economic policies.

The handouts were small beer, given the scale of our living standards crisis and another real pay cut for public servants. More nasty details on pensions and welfare are bound to emerge from the small print.

Most telling of all, youth unemployment is rising again. But while millionaires will get a big tax cut next week, the chancellor couldn't find any money to support the million young people desperate for work.

Simon Walker, director general of the Institute of Directors

I am glad to see that the chancellor ignored the distractions of polling and special pleading. There was no weakening of his commitment to deficit reduction. With a crisis boiling over in the eurozone again, he was right not to deviate from this road, difficult as it may be.

Similarly, he continued his previous policies of driving down corporation tax and raising the income tax allowance, both of which will help to make us more competitive as a nation.

The employment allowance was a nice surprise – thanking businesses for their heavy lifting to increase employment levels, and improving the chances for the unemployed to get into work.

When you add in his measures to allow a British shale gas industry to flourish, with a general boost to jobs and reduced reliance on costly foreign imports, this was definitely a positive budget for business.

Ian Stewart, chief economist at Deloitte

Weaker growth means that Mr Osborne will make even slower progress in his goal of eliminating the government deficit. The Treasury now forecasts that public borrowing will be £55bn, or 16% higher, over the next five years.

Tim Knox, director of the Centre for Policy Studies

This was a budget of the good, the bad and the ugly. But the good did not dominate [in] the context of the ugly truth that the deficit is still extraordinarily high. The result is that gross debt (under the Maastricht criteria) will have broken through the 100% of GDP barrier in 2015-16.

Mouhammed Choukeir, chief investment officer at Kleinwort Benson

The deficit is not expected to be under 3% until 2017-18. This is a cause for worry, especially if growth suffers further downward revisions. Further revisions are probable, given government's history of inaccurate forecasts.

Mike Amey, managing director and head of sterling portfolios at Pimco

This is a fiscally neutral budget, with the onus still on monetary policy to provide cyclical stimulus and support growth.

Contributor

Jennifer Rankin and Phillip Inman

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