Brown sets the fiscal scene for the next three years

Budget: Brown sets the fiscal scene for the next three years - at Moneyweek.co.uk - the best of the week's international financial media.

Gordon Brown's big speech to the Commons on Monday was vital listening, mainly because it set out the Government's spending plans for the three fiscal years to 2007/8. But there was more to it than that. As Andrew Grice points out in The Independent, it also clearly set out Labour's battle plan for the next general election: extra money for the under-fives and for fighting street crime and global terrorism, and a plan to axe 104,000 civil-service jobs to divert cash into frontline services. It was a "classic text for the Blairite era", said Larry Elliott in The Guardian; more money for the kiddies, but a crackdown on sickies (see below). There was extra money, too, for science, homeland security, the armed forces, international development and community policing - all areas in which Labour aims to wrong-foot the Tories by painting them as short-sighted skinflints.

The key to this surpisingly munificent spending round (the Treasury had skilfully managed to down expectations in the run-up to Brown's speech) is low unemployment and Government debt. "Labour's record here is impressive," said Elliott in 1997, the Tories were forking out 1% of GDP on unemployment benefit and 3.6% on servicing the national debt. Labour has slashed those figures to 0.3% and 2% respectively (this latter the lowest debt costs since 1915). That's why, although overall Government spending will not change much, Brown still has an extra £26bn to invest on frontline services. All in all, this was a masterly, vote-winning performance from Brown, said The Guardian, and one that fused his "social conscience with his finely tuned political antennae". The serious problems of Britain's social infrastructure are at last being addressed "with a zeal unprecedented among recent politicians".

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