The overall message from the budget is ongoing prudence

Morning View
Morning View

Even before 2010, when the Conservative-Liberal Democrat coalition government took power, there were warnings of ‘Tory Cuts’ that would follow a Conservative return to Downing Street.

Since that prospect became a reality, after 13 years in opposition, there have indeed been cuts – even the Lib Dems acquiesced in them, due to the UK’s debt problem.

Now that the Tories hold power unhindered by coalition, the cuts are continuing and form a centrepiece of the current administration’s strategy for governance.

But the cuts are nowhere near as swingeing as critics love to portray them. It would be too politically toxic for a Conservative government to implement the sort of cuts that would be necessary to balance the books.

Britain’s debt is spiralling ever upwards. Only the deficit is being cut, which is the level at which the debt is rising, and even that is not being reduced to the extent that George Osborne was hoping. It will fall to 2.9% of GDP next year, rather than the previous forecast of 2.5%.

The chancellor is operating in a fragile political environment. His very job is on the line in the coming Brexit referendum, given that he is closely allied to David Cameron (who will have to resign as prime minister if Britain quits Europe, even though he cannot admit that now).

Thus Mr Osborne has shied from doing things that he had considered such as lowering the top rate of tax to 40% and raising fuel duty. There were arguments for both proposals: cutting the top rate of tax from 50% to 45% raised extra revenue and fuel prices are at a recent low, which would have disguised the rise. Northern Ireland, as a rural and car dependent society, would have suffered in such a rise so the lack of it is good for our economy.

The overall message of fiscal prudence from yesterday’s budget has implications for NI. The spendthrift days are ending and, as John McCallister writes on the opposite page, we need to have strategies to cope with the consequences of that.