Budget meets low expectations

After last year's omnishambles', the government was careful to lower expectations drastically in the run-up to this year's Budget speech. Not that there was any scope for spectacular moves: a triple-dip recession is looming and Chancellor George Osborne had made it clear that he would not deviate from his austerity programme.

He "is sticking doggedly" to the script, said Capital Economics. The measures were fiscally neutral and there were virtually no surprises.

Osborne will cut national insurance (NI) by £2,000 for every firm, while 450,000 small businesses will pay no employer's NI. Meanwhile, corporation tax will fall by 1% to 20% in 2015. More money for infrastructure spending will be paid for by a squeeze on tax avoidance and further cuts in current spending. The tax-free allowance will be raised to £10,000 in 2014.

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The government also plans to help people onto the housing ladder with interest-free loans of up to 20% of the value of new-build properties, along with state guarantees to underpin £130bn of new mortgage lending.

What the commentators said

As far as the big picture is concerned, we had the usual "litany of missed targets and broken hopes", as George Parker put it in the Financial Times. Growth for 2013 and 2014 is now expected to reach 0.6% and 1.8%, down from respective forecasts of 1.2% and 2% in December.

With growth consistently lagging, the deficit and debt situation remains "a disaster", said Thomas Pascoe on Telegraph.co.uk. The original plan was that by 2015 the government would have eliminated the annual deficit and begun to reduce the overall debt pile. But it now turns out that we will still be adding to the debt in 2017/2018, with a 2.2% of GDP overspend forecast. This year's deficit is set to be 7.4% of GDP, against 6.9% anticipated in December.

Osborne's fiscal changes amount to "fiddling with a few billion pounds in an economy of 1.5 trillion", said Ian Campbell on Breakingviews, so most observers were primarily interested in whether monetary policy could help get things moving.

Osborne announced changes to the Bank of England's remit so it can use unconventional policy tools and forward-looking guidance telling markets about its likely moves on inflation in the months and years ahead, for instance, to influence interest-rate expectations.

But this is hardly a huge change from the status quo, and with so much printed money already thrown at the economy, the Bank "is short on ammunition" to effect a growth spurt, said Capital Economics. The recovery will stay "very sluggish".