Budget 2011: economy

After the fireworks of the emergency Budget last June and the Spending Review last October the 2011 Budget was a comparatively sedate affair. The Chancellor announced that he would stick to his previous plans for fiscal consolidation while fine-tuning the details in order to protect motorists increase personal allowances and reduce headline corporation tax rates. The money spent on these measures was clawed back from the banks and the North Sea oil companies. The Chancellor also announced a package of reforms aimed at boosting longer term growth. All of the Chancellor’s plans rest on economic growth continuing over the next five years in order to get public borrowing down. So we begin below by assessing the new OBR forecasts for growth and borrowing before going on to consider how far the Budget measures will succeed in boosting longer term...