Budget 2024: So Will it Work?
November 2, 2024No. Or to soften that short dismissal, not as the government would have hoped either short or long term. And it will be very difficult for the Labour party in the country to explain. But there was good stuff, buried in the noise around fuel payments and death duties on farmland.
There was for the first time for over a decade an absolute commitment to growing the real economy, in other words building new wealth rather than inflating fixed assets. There was also a frank recognition that the public services were on the brink, along with much of the crumbling infrastructure, all starved of investment for the entire period of Tory rule.
But there was absolutely no recognition that the economic model was blown, so that tinkering with book keeping and setting up more golden rules will have no lasting effect. The tax hikes will do little to produce extra money because they will lead to contraction rather than growth as the OBR forecasts now confirm. For the record 1. something or less p.a. does not count as growth on this blog and bumping along the flatline will never balance the books.
Initially the markets showed signs of taking fright. They have settled down but are watching nervously. Meanwhile the money the the government will have to fork out to pay for its borrowing is going up not down. And its borrowing ambitions are eye watering still for its day to day expenses, even if you forgive as urgently needed the investment segment of it.
Politically the budget has been bad for Labour in the short term and boosted Tory morale as they elect a new leader. There is no doubt in voter’s minds that the Tories made the mess. What they are now nervously waiting to see is whether Labour has made it worse. The next year will make or break the Starmer government. It may have a super majority in parliament, but that was brilliantly built on 35% of the total votes cast. A tiny negative swing would lose them 200 seats. A vast army of frightened backbenchers is no firm base from which to govern. As the Tories discovered.