If George Osborne wanted to win back the UK’s across-the-board AAA credit rating, this was a budget that failed. The UK is going to take a long time to win back that particular trophy from the three ratings bodies now that so much of our deficit reduction is predicated on further swingeing cuts in public-sector spending. The two credit-ratings agencies that still give Britain the top accolade could join Standard & Poor’s and force us to join France and Italy on lower rungs of the credit ladder.
George Osborne has proved a deft handler of budget cuts in the past couple of years. Reductions in disability benefits and housing benefit have either been phased out or hit groups who lack political clout. Since the 2011 riots, social unrest has been limited.
Whitehall has learned to dodge head-on fights. Osborne also learned that his first two years of severe cuts and tax rises were politically and economically illiterate.
As Jonathan Portes, head of the National Institute of Economic & Social Research thinktank, said: “Osborne tried accelerated fiscal reduction and saw that it didn’t work. In fact, it made things worse. And though he said he was still implementing it, behind the scenes he was taking his foot off the accelerator.”
According to Portes, the change of tack is why we now have growth and a feelgood factor that could prove to be sustainable for the rest of the decade.
via The Guardian
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