Treasury

George Osborne’s two fiscal rules have been around since his very first Budget, delivered almost two years ago, so they’re hardly news. But they do underpin much of what he’s done since, including last week’s statement, so they’re also worth knowing about. Fraser touched on ome of the detail in a post last weekend, but here’s a supplementary guide for CoffeeHousers: 1) The deficit rule. This is the one that seems to cause the most confusion, perhaps because it has often been simplified — wrongly — as something like ‘eliminate the deficit by the end of this Parliament’. Fact is, the ‘end of this Parliament’ doesn’t come into it. And as for ‘eliminating

Will George Osborne’s refusal to look again at high levels of state spending become the greatest risk to Britain’s economic stability? There have been plenty of rude comments about the Chancellor’s supposed tactical ineptitude in the weekend press, but he has still managed to keep on borrowing and have almost no one notice. Osborne’s iron commitment is to spending, and a programme of cuts which total just under 1 per cent a year. His commitment to deficit reduction is flexible, as his three Budgets have demonstrated: Osborne spent the election campaign berating Labour for its lack of ambition in halving the deficit in four years. He’s now doing it in

Ed Balls committed Labour to voting against the reduction in the 50p rate at his post-Budget briefing. But he wouldn’t say whether or not Labour would pledge to restore it in their manifesto; sticking to the classic opposition line that all decisions on tax will be made in the manifesto and not before. Balls, though, was on typically pugilistic form; few politicians relish a scrap as much as he does. The Labour leadership clearly view the abolition of the 50p rate as a major political opening for them. Balls went out of his way to attack the HMRC report that Osborne used to justify the move. He mockingly declared that

The big Budget news tonight is that the personal allowance will rise to £9,205. This is a larger increase than expected and, intriguingly, will be paid for — in part — by a couple of billion more of spending cuts. So, the Lib Dems see considerable progress on their main budget priority, raising the income tax threshold to £10,000, but this will be partially funded by something Tory MPs have been calling for, more spending cuts. It also appears that the coalition will further increase the pace of its corporation tax cuts as well as introducing a new higher rate of stamp duty for £2 million plus houses. There’ll also

In the last few months, there’s been a distinct change in the attitude of the Tories at the heart of government. They are now far more cognisant of just how difficult it is to drive change through the government machine. It is no longer just Steve Hilton and Michael Gove complaining about this, but Osborne and Cameron too. The Chancellor’s particular frustration at the moment is over the pace of planning reform. Osborne and his brains trust believe that simplifying the planning rules is one of the things that they could do to both give the economy a short term stimulus, by encouraging more construction, and improve its long term

In today’s Telegraph, I profile Rupert Harrison, chief economic adviser to George Osborne and the man who’ll do more than anything else (including his boss) to shape next week’s Budget. In the British political system, special advisers are given very little attention — even though the best of them are more influential than the average Cabinet member. The Treasury’s vast power, assembled by Brown, is still there. That can’t be said for Osborne: he spends half his time in Downing St, and is sufficiently detached from the Budget process that he felt able to take a couple of days’ holiday in America last week to jump in the motorcade and

Will George Osborne scrap the 50p tax in next week’s Budget? Whispers to this effect have been getting louder, and now the Guardian is saying that it will come back down to 40p, and it makes a lot of sense. As I argued in my Telegraph column a fortnight ago, this is the perfect time to do it. Axing the tax paid by 1 per cent of the population will be unpopular with the remaining 99 per cent, so if Osborne is going to take a political hit he should do so now. Anecdotal evidence of its harmfullness has been getting stronger: multinational companies saying they can’t persuade people to

George Osborne is planning to launch a 100-year bond, says the FT — a sure sign that the Bond Bubble is getting even bigger. These devices are usually used by American universities: the California Institute of Technology issued one at 4.7 per cent, MIT did one at 5.6 per cent, and a few American companies have tried at 6 per cent. The Mexcians sold a billion bucks’ worth of century bonds a while ago at 6.1 per cent, so it would only be a matter of time before HM Treasury — a world leader in, ahem, novel debt vehicles — was going to do the same. The US Treasury Borrowing