The Budget: Osborne walks a tricky tightrope

For the first time since 2007, the economic context is “more or less benign” for the chancellor’s budget speech, says Janan Ganesh in the FT. This is George Osborne’s opportunity to prepare his electoral message – but that message is tricky to get right.

Most Tories want to define themselves as the party of tax cuts. These are simpler than Labour’s “roundabout ways of improving living standards – which include energy price freezes and other meddling – and they are “congruent with the Tory soul”. However, this is dangerous territory.

If the question in voters’ minds is no longer “Who will manage the economy responsibly?” (which they believe the Tories will do), but “Who will do the most for me?”, because they think the ‘deficit scare’ has been taken care of, then the Tories are “done for”. Labour is known as the “big-hearted party”.

Osborne has a “tricky tightrope” to walk, pretending the economy is stronger than it is while also pretending that the “screw needs to be tighter” on future spending, says Polly Toynbee in The Guardian.

“Phoney” promises of “extreme stringency” – more cuts, a cap on welfare spending, a date for when the budget will show a surplus as opposed to the forecast 6.6% of GDP deficit for this year – cannot and “will not be kept”. They are “only useful for taunting Labour to follow suit”.

His pledges to help the lowest earners are a sham that “give most to the better off”. The decision to raise the annual limit that can be saved tax-free in an Isa savings account to £15,000 will be “popular with millions of households who hold the accounts, as will the fact that savers will be allowed to save the maximum amount in cash, instead of splitting their money between cash and stocks and shares”, writes the FT.

The chancellor has also made it more attractive for retirees to consider pension options other than annuities. “This is a vigorous but carefully calibrated tummy rub for sexagenarians with substantial private-sector pensions,” says the FT’s Tim Harford.

Given the improvement in the economy, these ought to be the “best of times” for Osborne, says Allister Heath in The Daily Telegraph. Yet Labour not only retains its “commanding lead in the polls but continues to set much of the agenda”.

The real problem facing Osborne is that people are finding their lives “affected by the medicine that the country was forced to take”, says The Times. The cost of living has shot up, and until household inflation is “quelled”, political gratitude will be thin on the ground.

Merryn

Claim 12 issues of MoneyWeek (plus much more) for just £12!

Let MoneyWeek show you how to profit, whatever the outcome of the upcoming general election.

Start your no-obligation trial today and get up to speed on:

  • The latest shifts in the economy…
  • The ongoing Brexit negotiations…
  • The new tax rules…
  • Trump’s protectionist policies…

Plus lots more.

We’ll show you what it all means for your money.

Plus, the moment you begin your trial, we’ll rush you over THREE free investment reports:

‘How to escape the most hated tax in Britain’: Inheritance tax hits many unsuspecting families. Our report tells how to pass on up to £2m of your money to your family without the taxman getting a look in.

‘How to profit from a Trump presidency’: The election of Donald Trump was a watershed moment for the US economy. This report details the sectors our analysts think will boom from Trump’s premiership, and gives specific investments you can buy to profit.

‘Best shares to watch in 2017’: Includes the transcript from our roundtable panel of investment professionals – and 12 tips they’re currently tipping. The report also analyses key assets, including property, oil and the countries whose stock markets currently offer the most value.