Today’s Pre-Budget report was yet again an exercise in procrastination. For all of the talk of hard choices, necessary decisions to restore the fiscal credibility of Britain were most certainly not taken.
A bit of tinkering here and there does not make a policy adequate to satisfy those commentators – including the IMF and the Governor of the Bank of England – who have said that the Treasury’s plans for fiscal consolidation are insufficiently rapid to restore the nation’s public finances to health. The Ratings Agencies are already uttering warnings about the affordability of the public borrowing – and those warnings should be heeded. Possible downgrading of British debt is all too real.
Of course a severe fiscal contraction in 2010 could damage the recovery. But this is hardly the point. The point is that the Chancellor should have announced today some solid spending plans along with a revised Comprehensive Spending Review, up to 2013-14 at least, explaining the required tightening in detail. He should have had the courage to do this and not leave all the unpalatable decisions to his successor after the General Election.
Let us be under no misapprehension. This country is facing a true fiscal crisis – arguably more severe than the one experienced in the 1970s – and there is an increasing chance the markets will yet resist the lure of buying more British sovereign debt. A buyers’ strike could well be on the cards. And then, once more, the country would be in the hands of the IMF. It happened in the 1970s – I remember the humiliation only too well – and could well happen again.
The Chancellor has shirked his duty to the country. Again.