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A Brexit Budget

This is what you need to know about a Budget which I broadly see as a Brexit Budget.

First, what were its priorities? Well these are revealed by the biggest spending commitments.

For the next financial year, 2018/19, they are:

  • £2.32bn for current and capital spending in the NHS - which is less than was wanted by its boss in England Simon Stevens but better than an ice-cold enema
  • £1.5bn to prepare for Brexit - to soothe the nerves of Tory Brexiteering ultras
  • £840m for the fuel duty freeze (as ever, yawn, cough)
  • £560m for stamp duty relief for first-time buyers on purchases up to £300,000 - which means young people will be marginally less indebted if they can afford to buy an inflated property at all
  • £300m for softening the short term financial pain for poorer households when they move to universal credit
  • £225m to freeze alcohol duties (burp)

You tell me if they are your priorities.

As for what an official described as the “hotch-potch” of measures to stimulate house building from the current rate of just over 200,000 units a year to 300,000, they don’t really kick in till the following year - when there’ll be about £1.2bn of help for local authorities, smaller house builders and housing associations.

On the tax side of the equation, there is nothing big or bold. There’s a small stealth tax on companies, from a freeze in indexation allowances. And a nod at a possible future reduction in the threshold at which small businesses pay VAT (10 Downing Street seems to have killed the Treasury’s hope of significantly increasing the numbers paying VAT, for fear of sparking a parliamentary revolt).

So the biggish politics is that there will be a £6bn stimulus in the year before Brexit and £10bn in the year after Brexit - to support growth that the Office for Budget Responsibility forecasts to be horribly lacklustre.

In fact the single most striking disclosure in the Budget is how gloomy the OBR has become about how little output-per-worker and per-hour-worked will improve in years to come - which means growth in the economy, wages and living-standards will all remain anaemic.

So two other points about the Treasury and the Chancellor - which are good and bad for them.

The good is that over the next five years there will be a significant shift in public sector expenditure away from day-to-day spending and towards investment - which should eventually improve productivity.

Let’s hope.

The less good is that the forecast fall in debt as a share of GDP from a peak of 86.5% this year has little to do with government efficiency and everything to do with promised sales (at a blinkin’ loss) of RBS shares and the reclassification of housing association debt so that it drops off the public sector balance sheet.

Or to put it another way, anyone worried that the public finances will not comfortably or painlessly absorb the impact of another great economic shock - which will hit us one day - will see this Budget as a bit head-in-sand.