OPINION - Budget 2023: better, but still really quite bad
Great art achieves apotheosis in performance. Shakespeare was designed to be seen, not studied. Music to be heard, not read off a sheet. Both spark to life through actors, musicians, directors and conductors to form something more magical than the sum of their parts.
Budget speeches are the inverse – at best listened to absent-mindedly, perhaps while hanging the washing or filling your newsletter template. In truth, they ought to be shunned in favour of the Red Book packed with caveats and figures the chancellor has for some reason chosen not to highlight.
There’s little point in summarising the policies announced, given that they were all pre-briefed over the last few days. Pensions, childcare, energy support – all were as expected. Fuel duty, my personal bête noire (I wrote about how it works in excessive detail here) frozen yet again.
The macro headline is that the Office for Budget Responsibility (OBR) is forecasting no technical recession this year. This is better than the alternative, and more optimistic than previous predictions including from the Bank of England, but is still really quite poor. As a reminder, other high-income countries such as the US and several in the EU are either at or have surpassed their pre-pandemic output levels. The UK is lagging far behind and not close to catching up.
Similarly bleakly, the OBR continues to forecast that living standards will fall – by 6 per cent over the next two fiscal years. Again, that is less than the 7 per cent drop forecast in November, but it remains the largest two-year fall since records began in the 1950s. Funnily enough, that particular stat never made it into Jeremy Hunt’s statement.
Other stray observations:
1) Chancellors making reference to records since 2010. This is pretty standard fare but only a few months ago, Liz Truss and Kwasi Kwarteng were labelling previous governments, including Tory ones, as wasted years of Treasury orthodoxy.
2) The Tories have been in office for a long time. In 2010, George Osborne – formally of this parish – introduced Local Enterprise Partnerships with the aim of reducing regional inequality. These have now essentially been abolished in their entirety. For the record, regional inequality has not.
3) Several notes of deja vu, from vague promises of investment in carbon, capture and storage (CCS) technology to small modular reactors. For context, in 2015 the Treasury cancelled a £1bn CCS competition while mini nuclear policy never went anywhere.
4) Sterling has not plummeted. The Bank of England has not had to make an emergency intervention to stabilise pension funds. This is a low bar but one Hunt’s predecessor failed to manage.
The question is, will this work? Well, clearly living standards are not rising anytime soon. But might the government gain a political advantage through its return to reality-based policymaking? Britain Elects‘ eve of budget voting intention handed Labour a 21-point lead, including 11 points on the economy. When it comes to the party leaders, though Rishi Sunak remains by far the Conservative’s strongest asset, his net favourability is -15, compared with Keir Starmer on +3. Let’s see how these change.
Finally, the usual health warning. While governments can and absolutely should take action to improve economic conditions, their ability to affect growth is often overstated. Britain is performing badly because of broad forces. Some are of our own making, such as Brexit. But most shocks are exogenous – from war to pandemics.
In broad terms, the UK economy is in a less bad place than it was last November. Growth is stronger. But that is largely down to lower inflation driven by the falling wholesale cost of gas and oil, rather than anything dreamed up in Whitehall.
In the comment pages, Martha Gill says our ambulance service is in freefall but nobody dares call it an emergency. Ayesha Hazarika thinks we should rage against our national broadcaster being dictated to. And in a joint piece, Sadiq Khan and former New York City Mayor Mike Bloomberg argue that now is the time to tackle the next frontier in public health.
And finally, while “Marry the man today and change his ways tomorrow” may be the single worst piece of dating advice in the history of musical theatre, Guys & Dolls is back on the London stage and has earned a five-star review from chief theatre critic, Nick Curtis.
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