Budget 2011: Still Banking On Plan A

Roger Bootle, Economic Adviser To Deloitte, Gives His Response To The Budget

• The central player in this budget is something which lies beyond the Chancellor's control - growth. Although he announced a plethora of measures aimed at increasing it, even if these are successful, they will have their effects only in the medium term. Growth in the short term will depend entirely upon aggregate demand and on this the budget had virtually nothing to contribute. For it was broadly neutral, as the cost of its umpteen measures was met by money raised.
• Meanwhile, the economic backdrop remains extremely challenging. It would not be difficult to imagine growth turning out much weaker, and therefore borrowing higher, than in the government's plans. This is particularly true given that higher inflation threatens to tip the MPC into raising interest rates prematurely - at just the time that consumers' real incomes are under serious pressure.