Alistair Darling will present “the most important budget in decades”, said the Evening Standard’s Hugo Duncan, “with the public finances in disarray and the economy shot to pieces”. The Chancellor will try to give the economy some much-needed support, while reassuring the markets that the public finances will “eventually return to health”, said Roger Bootle in the Western Mail.
But “he’s unlikely to achieve either convincingly”. That’s because the public purse’s problem – a prospective £200bn deficit next year – isn’t just short-term. The government raises just £3 in taxation for every £4 it spends, unprecedented in peacetime, said The Independent’s Hamish McRae. This is no “one-off hit from the banking crisis or the recession – it’s a continuing, grinding truth that we simply don’t pay enough tax to fund our present level of public spending”.
But with public-sector trade unions likely to block spending cuts, “expect the government to come after your hardearned cash”, said Ali Hussain in The Sunday Times. PricewaterhouseCoopers’ John Whiting sees “almost everyone affected by a tax increase”, as “taxing just the wealthiest is unlikely to produce all the revenue required”. VAT, national insurance, income tax and stamp duty are all candidates. There is even speculation that the tax relief on pensions for higherrate payers could be under threat, while duty on tobacco and alcohol will rise. By that stage, we’ll all need a stiff drink…