There are factors which neither Alistair Darling nor any other major politicians have highlighted this week. A return to growth as forecast in the Budget does not take account of the fact that in future the financial services sector will inevitably be a lot smaller and therefore produce less tax revenue assuming that it is to be better regulated and not allowed to gamble quite so recklessly in the future as it has done in the past. To balance the country’s books according to this Budget will require a similar size of GDP and yet there is no strategy to replace the gap in the financial sector with something meaningful like manufacturing.
The government and particularly Gordon Brown are hellbent on fudging and spinning the facts of this recession and the length of time it will take us to get anywhere near a balanced budget. Everything possible has been done to delay the nasty medicine of a permanently poorer nation until after the next election. At that time it will be necessary to decide what we can afford as a nation and not what we think we need. This will mean major cutbacks. If education, health and benefits are to be maintained at anything like the present levels it could mean cutting back on the armed services, on road programmes and other equally unpalatable areas.
It would be ironic if this delaying strategy were to let Gordon Brown win the 2010 election. He should think of John Major’s win in 1992 and how that effectlively put the Tories out of office for a decade and more.