There should be a health warning on the Chancellor’s forecast; “Do not believe.” Fair enough, the fall in UK GDP of 3.5 per cent for 2009 looks reasonable but, for the economy to achieve growth of 1.75 per cent in 2010 it would require an extraordinarily vigorous bounce back, which is simply not credible. Why? Because the reasons for much of the growth leading up to the financial crisis, buoyant public spending and a rapid increase in consumer indebtedness, cannot be replicated.
Moreover, growth rates of 3.25 per cent in 2011 through to 2013 should not be regarded as realistic forecasts, they should be regarded as illustrative assumptions- nothing more and nothing less.
Given these over-optimistic GDP figures, the implications for the public finances are serious. The current projections are bad enough, the actuality will be far worse, unless a scalpel is taken to public spending. But the Chancellor knows he will not be the man to do it.
The Chancellor has fudged the issues, kicked them into the long grass and left the nasty work to his successors.