Budget 2016

“The Chancellor’s political fate is very much bound up with what happens in the Brexit vote, which to some extent will be a vote of confidence in the current government. If the decision is to remain, his own future should be relatively bright, and he will be a strong candidate to succeed David Cameron; but a leave verdict would not enhance his leadership prospects.”

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Political considerations were dominant in framing George Osborne’s Budget last year, 50 days before the General Election. They will again be dominant this year, 99 days before the EU referendum.

The Chancellor’s political fate is very much bound up with what happens in the Brexit vote, which to some extent will be a vote of confidence in the current government. If the decision is to remain, his own future should be relatively bright, and he will be a strong candidate to succeed David Cameron; but a leave verdict would not enhance his leadership prospects. Accordingly, we would expect him to avoid doing anything too controversial, and to attempt to create the impression of quietly assured competence, that the government’s economic policy is succeeding, but also that we need to give them more time to realise the fruits of their policies.

Talk of the ‘uncertainty’ of the economic environment must be evaluated in this context. If things are not going too well - he is missing his targets and having to downgrade his forecasts - then he must convey that this is because of what is happening in the rest of the world, not as a consequence of his policies. This may only be partially true. Some of what is happening globally, such as the decline in world oil prices, may actually benefit the UK economy.

We will have to wait at least until 24 June to judge whether the Budget was a success in meeting the Chancellor’s prime political objectives.

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