Osborne's panto an exercise in politics not prudence

January 13, 2015 10:03 AM

Upon entering office, Osborne repealed the Fiscal Responsibility Act 2010 which set a number of sensible deficit reduction targets.

Let’s assess Osborne’s performance in meeting the targets set by the last government using figures from the Office of Budget Responsibility (OBR) – the organisation created in the legislation that repealed the Fiscal Responsibility Act.

The initial duties:

1)      “The Treasury must ensure that, for each of the financial years ending in 2011 to 2016, public sector net borrowing expressed as a percentage of gross domestic product is less than it was for the preceding financial year.”

FAIL

table_AW_1.PNG

2)      “The Treasury must ensure that, for the financial year ending in 2014, public sector net borrowing expressed as a percentage of gross domestic product is no more than half of what it was for the financial year ending in 2010.”

FAIL

table_AW_2.PNG

3)      “The Treasury must ensure that public sector net debt as at the end of the financial year ending in 2016 expressed as a percentage of gross domestic product (centred on 31 March 2016), is less than public sector net debt as at the end of the previous financial year expressed as a percentage of gross domestic product (centred on 31 March 2015).”

FORECAST TO FAIL

table_AW_3.PNG

Warren Buffet once boasted of his ability to end the deficit in 5 minutes:

“Pass a law that says that any time there’s a deficit of more than 3 per cent of GDP, all sitting members of Congress are ineligible for re-election. Now the incentives are in the right place.”

Food for thought!

 

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