What sort of Budget will George Osborne unveil on 20 March? In this week’s Spectator, Fraser Nelson predicts that it will be an empty one, devoid of radicalism. The piece outlines one meeting in which the Chancellor explained why he is feeling so cautious:

Before every Budget, George Osborne always seeks the advice of various MPs. He usually doesn’t heed it but it’s a good way, he thinks, to keep the troops happy. As the economic headwinds have strengthened, this advice has tended to be increasingly radical and in a recent meeting with the Free Enterprise Group of Tory MPs, the Chancellor made clear he was in no mood for it. ‘Look,’ he told them, ‘I tried radicalism in last year’s Budget, and I had blowback for it. So I’d take quite some persuading to do something radical this time.’ The MPs left with the clear impression that he is now preparing what will be, in effect, an empty Budget.

If Osborne were planning to change course before the next election, he’d have to do it now. The plan he set out three years ago had the Olympics marked down as a turning point — assuming that debt would by then be under control and he’d be mulling some celebratory tax cuts. Instead, Britain seems mired in what is, officially, the worst recovery in history. Progress on the deficit, Osborne’s defining mission, has halted. The AAA credit rating he once prided himself on has gone and youth unemployment is reaching crisis levels. If the Chancellor had a secret plan for growth, now would be a good time to produce it.

So if he’s not placing his faith in tax cuts, what is Osborne banking on? Fraser says the Chancellor’s ‘strategy is not radicalism but Micawberism, a hope that something might turn up’, and that ‘he places far more faith in quantitative easing’. But the graphic below shows that this is not a policy without losers:

In fact, the focus should be less on what’s going on in the Treasury and more on Threadneedle Street:

The importance of cheap money policy explains the excitement about the arrival of Mark Carney, who runs Canada’s central bank. As one No. 10 official puts it: ‘The day when Mark Carney sits down will be far more important than the day when George Osborne stands up.’ With so little importance placed on Budgets, it is the Governor of the Bank of England who is taking the lead on UK economic strategy. Hiring someone of Carney’s global stature was a coup for Osborne, but no one is quite sure what he will do. The future of Osborne’s easy money strategy lies in his hands.

You can read the full piece in this week’s Spectator, available in print and online from tomorrow morning. Click here to subscribe.


Join us after Osborne delivers his Budget to discuss ‘Whatever happened to the recovery?’ Andrew Neil, Fraser Nelson and James Forsyth will discuss what the 2013 Budget means for Britain’s economic future on 20 March. Click here to book tickets.

Tags: Budget, Conservatives, George Osborne, Quantita, UK politics