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“Certainly not a budget” is the basic message emerging from the Treasury on the economic statement on Wednesday.
There will not only be the red box outside the number 11, there will be only a “slim book” new policies with a “light dashboard” of measures without any other tax increase.
So what is the interest of this spring declaration?
It is mainly a spring forecast of official forecastists of the government The Budgetary Budget (OBR) Office. In this process, he had to take into account a slower than expected economy and higher government loan costs.
This OBR forecast has annihilated the maneuvering room against the “non -negotiable” rules that Chancellor Rachel Reeves established government loans in the future. She made a number of other adjustments to keep the figures on the right track.
Essentially low growth and higher borrowing costs have exploded the budgetary number.
We will hear the chancellor a lot about the way “Le Monde has changed”.
The reality is that this course correction would probably have been necessary before President Trump transforms worldwide diplomacy and trade.
On Wednesday, we will discover if the Chancellor can continue to exclude using tax increases, even in this “changed world”.
And if there is no return to spend austerity, then where does money come from?
Although no significant tax measurement is expected, the chancellor can nevertheless leave the option on the table for the fall budget.
Some economists expect tax increases in the fall, in particular to respond to the increase in defense expenses. We are talking about a “conversation with the public” on this subject.
On her first budget, the Chancellor rejected, for example, extending conservative frost with two -year income tax thresholds. The public could have a clear idea of this spring declaration if this is optional.
The reduction of 5 billion sterling pounds to social expenses already announced is the largest social protection cup for a decade. It is probably the greatest economy.
On Wednesday, the number of people losing personal independence payments (PIP) and a universal credit, how on average and the split between current or future beneficiaries should be revealed. Hundreds of thousands will lose thousands of health -related services.
There is a reduction of 2.2 billion pounds sterling at the administration fees of the public service, including staff by 2029-30. A decrease of 15% is a significant part of what is spent by the central government for wages and consultants.
However, the Chancellor suggested a loss of 10,000 roles, which is only a pruning of a workforce of more than half a million-especially since it sees 30,000 outgoing each year.
Unions say that this cannot be done without harm to the front line services. There is a lot of conduct here on the deployment of automation and artificial intelligence.
Another section fractional to the increase in ministerial budgets, a repression of tax evasion and the transition from aid to defense expenses should all help restore the Chancellor’s room for the maneuver of a few billion pounds.
It will be difficult to characterize this as “austerity” given the early injection of important initial sums in public spending on the budget.
Dividing the increase in defense spending will be a key characteristic of the spring declaration.
Defense expenses (for example, on jets and tanks) are greater in capital than assistance spending, so more of these are exempt from the Chancellor’s self-imposed borrowing rules to limit daily expenses only to what is raised in taxes.
Growth demotion
Naturally, the emphasis will be placed on a coarse degradation of OBR forecasts for the economy in 2025.
The real question for the Chancellor was the extent to which it was made until the end of the forecast period, and therefore constantly held the economy and tax revenue. He may not have had an impact on budget figures.
The treasure also tried to obtain the OBR to give it a credit for reforms improving growth such as planning changes.
In theory, higher growth means a drop in forecasts and more room for maneuver – a winner -win. But the OBR may have become more strict on this subject after a recent external examination of its methods.
There is a larger image here on government growth and strategy. Investors and businesses are still waiting for the infrastructure, industrial and commercial strategies of this government eight months since it took power.
The new global reality means more in -depth uncertainty, but also creates a significant potential for a stable advanced economy based on rules with science, research and financial services of the advanced border.
This is particularly the case for a nation that can simultaneously maintain its trade and investment links with the United States, Europe, China and the Gulf, even in the middle of the pricing tumult. In the cabinet, they call it “the most connected economy in the world”.
Does the world hear that? British government’s loan costs have increased again while markets are waiting for the new bond sales schedule on Wednesday.
Bond yields in the United Kingdom increased with the United States in January, but when it stopped, they also raised themselves online with Europe after massive debt rearmament plans. It is the worst of both worlds for borrowing forecasts.
The spring declaration could be an opportunity to project the opposite case – that the United Kingdom is only placed to be the best of both worlds. A kind of economic agreement with the United States is imminent and discussions on the reset of Brexit are also increasing.
There are some small signs of the economy that come out of its recent rut, especially in the service sector. Small businesses of retail and hospitality feared the increases in national insurance and living national salary hold for a kind of relieving pain.
So, Wednesday, although certainly not a budget, will answer certain important questions about the economy.
