I am almost beginning to feel sorry for George Osborne. Almost but not quite.
As the last General Election campaign got underway in 2010 I heard more than one Tory MP remark that this was an election they didn't really want to win because the economic crisis was so bad that no-one could tackle it effectively in one Parliament. Their fear, reflected by a few commentators at the time, was that whoever won would only last one term as they would have to administer so much unpleasant medicine that wouldn't take effect until towards the end of the decade that they could find themselves thrown out of government for a generation. In short, whatever Osborne does he and Cameron can't win.
Many economic and political commentators have damned this week's Budget with faint praise, pointing out just how little room for manoeuvre the Chancellor had. In short, he was in a no-win situation.
Both analyses are broadly correct but I'm afraid that has not quite got me to the stage where I feel sorry for the Chancellor of the Exchequer because I don't think he has played his limited hand as ineptly as many would have us believe. I think he has been ruthlessly cynical in what he has done, putting short-term party interest way before the longer-term interests of the economy.
Most of what he announced is economically irrelevant but carefully crafted to avoid being caught in the trap that would see them turfed out of government for a generation so soon after returning from an 18 year exile.
Why else would you cut duty on beer? Short term populism, nothing else.
Why else would you come up with some crude tools for fuelling another housing boom? Because people feel good when they see their house prices go up which if his scheme has any impact is precisely what will be happening in 2014-15.
Why else would you be cutting personal and corporate taxes - but holding back the implemention for a year - when you still need to reduce the public sector deficit? Because it will put more money in people's pocket as the election nears.
Why else would you be promising increased spending on infrastructure just in time for it to start having an impact before the 2015 General Election but without any clarity in how you are going to pay for it (that can wait until after the election)?
I could go on but you get the point – or should that be pint?
Couple that with lots of tough talk about further substantial cuts in public expenditure but absolutley no indication as to precsiely how they are going to be achieved and you can see what Mr Osborne is doing. He is playing his poor hand not in the interests of the country but in the narrow interests of the Conservative Party.
He has to be careful here as he could just as easily give the Liberal Democrats a leg up the opinion polls as his own party. The £10,000 income tax allowance is a policy closely associated with the Liberal Democrats and one they have been quick to - rightly - claim credit for seeing through. My guess is that reducing people's income tax bills will prove more popular on the doorstep than a cheaper pint of beer.
I know that many will try to paint this as another incompetent Budget that could easily unravel as quickly as last year's hamfisted effort and that the twin mortgage subsidies are already being characterised as a blunder. I think the way Osborne has so far brazened out the criticisms of these schemes and their likely impact shows that he is much more confident that he has done the right thing/ He clearly believes – but cannot say – that a pick up in house prices will reflect well on the government. Of course, it is economically illterate and the very last thing the housing market needs but if it garners more votes for the Tories in 2015 he will view it as job done.
Start viewing the rest of the Budget from the same perspective and it starts to make sense, at least for one of the government parties.
That is why I don't feel sorry for him.
A huge well done to all involved with organising our Remembrance Day event on Friday, including our Corporate Real Estate team. One of them, Ibrahim, took this incredible footage of poppies dropping as he (along with others) leaned (safely!) over the gantry to let them go. pic.twitter.com/pSbapkWBBR— Lloyd's (@LloydsofLondon) November 12, 2018
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