Yet more indications today of Britain’s radically altered political landscape. Some irony that the Labour left’s long-desired aim to cancel a raft of multibillion pound defence contracts will, in all probability, be realised by a Conservative chancellor responding to the costs of a crisis in capitalism.

I can’t get across enough how much this crisis has made all sorts of certainties about how Britain’s economy is run, well, completely uncertain. read more

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A measure of the new world we are entering. Between this financial year and next there is a cash increase of £30.2bn in public spending. Of that increase, fully £15.7bn is going on interest payments servicing our newly ballooning debt.

The total interest payments of £43bn will be more than non-investment spending in the defence budget, and seem to remain at around 3 per cent of GDP for the foreseeable future.

Now Gordon Brown used to refer to that proportion of additional spending devoted to debt interest and social security as “the costs of failure”. The then-chancellor said at the time read more

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In a nutshell: we have a £5bn tax cut right now. A boom, Then a £5bn tax rise.

Massive deficits in the coming three years of half a trillion pounds. BUT even those rely on a remarkable boom in 2011. Look at the chart below to get an idea of the likely size of the deficit in comparison to those since the Second World War (click to see a larger version): read more

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This is a day on which you will need to know what a trillion looks like.

We are working on a physical representation of what a trillion pounds looks like. But just for guidance, go to YouTube (see below).

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“Building Britain’s Future” is the title of today’s budget, but it will be a document mired in the past. The figures released at lunchtime will make the wrong sort of long-term history, marking public debts and deficits never before seen in peacetime.

But really this is a budget about recent history, about the calamitous carnage wrought by the credit crunch on Britain’s public finances. It could be called the hangover budget.

Firstly, despite the wobbles of the IMF, we will get the first indication of the direct bill read more

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On a day when deflation becomes official on Britain’s most commonly watched price measure, when the IMF suggests the world’s financial system is barely a quarter of the way through dealing with $4.1tr of rotting toxic assets (and that doesn’t even include the infamous stockpile of uranium that Lehman owns), an enterprising economist might ask why tomorrow’s budget isn’t going to be the Mother of All Budgets.

At a time when the Treasury printers are running out of red ink, it’s a little contrarian, I realise, but if there’s only one lesson to learn from the credit crunch, it is this: read more

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UPDATE: The IMF retracted its claim.

ORIGINAL POST: The IMF has hugely upgraded its projection for the likely total costs of the bank bailout.

In today’s Global Financial Stability Report the costs of financial stabilisation are put at a whopping 13.4 per cent of GDP, or £200bn. This brings the IMF in to line with the estimates from the experts in our special investigation last month. read more

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The budget is less than 48 hours away, yet there may be as much left out of this document as put in.

Certainly the single biggest budget decision made since November’s mini-budget may or may not score in the number crunching: a likely loss of tens of billions from the government insurance scheme for the toxic assets of RBS and Lloyds – the Asset Protection Scheme.

At the Treasury, ministers privately describe that move as the largest contract signed by the UK government read more

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