29 Nov 2011

Government borrowing hits new highs

George Osborne just told us the government is borrowing £111bn more than he predicted in March. Borrowing is now well into and above the levels Alistair Darling predicted in his last budget in March 2010, levels which, as I mentioned in the last blog, George Osborne said threatened catastrophe.

It is £30bn more borrowing for 2011-12/2014-15 than allowed for in the March 2010 red book. Mindful of that, the chancellor made a point of saying that Alistair Darling would have wobbled wildly off track himself on debt if he had pursued Labour’s original policies after 2015 and we would be “in the middle of a debt storm.”

We are though, by the chancellor’s own admission, on the edge of a potential Europe-wide recession storm that could throw all these downgraded numbers further south.

“Much worse outcomes” are quite possible for Britain and contingency planning for a eurozone and European banking collapse is “extensive.”

The effective pay cut for public sector workers – a two year 1 per cent cap to follow the two year pay freeze – was accompanied by a threat to bust national pay bargaining in the public sector. Hard to imagine that won’t harden feelings ahead of tomorrow’s public sector strikes.

The chancellor has slipped £0.5bn out of the international overseas aid budget to make sure we “don’t overshoot” our attempt to reach the 0.7 per cent of GDP, given that GDP isn’t exactly growing at the predicted rate. The protections for the aid budget were a bone of contention amongst Tory MPs. But it’s not something the Cameroonians would have imagined themselves doing not so long ago. How times change.

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