Budget 2005 Tight, but not quite as tight as it looks

Roger Bootle, Deloitte's Economic Adviser, comments on the Budget:·

• For a pre-election Budget, this was a pretty restrained affair. Indeed, the tax and spending measures add up to a small fiscal tightening of £265m in 2005-06, a far cry from the giveaway of up to £5bn some commentators had expected.

• The true "tightness" of the Budget is exaggerated a bit
, however, by the fact that the tax cuts and spending measures are partly financed by a projected reduction in tax avoidance, worth up to £1bn in 2006-07. Moreover, the usual reduction in the margin included in the spending plans, and an increase in projected asset sales, also help to keep the borrowing numbers in check.

• Mr Brown made much of his fiscal responsibility in abstaining from a pre-election bonanza, but the reality is that he had very little money to play with