Increasing the supply of credit and money to pass those low rates on to families and businesses.
Rebalancing our economy with an active enterprise policy and new infrastructure.
Help with the cost of living on fuel duty and rail fares.
All this takes Britain in the right direction. It cannot transform our economic situation overnight.
He also urged people to listen to the OBR:
Their forecast today demonstrates beyond any doubt that their independence is unquestioned. But if we accept their numbers we must also pay heed to their analysis.
Not mentioned by George Osborne in his statement was box 3.2 of the OBR’s report in which they assess the policies he announced today.
I’m not surprised he shied away from discussing this as the results are pretty damaging.
Their assessment was as follows:
- On the increases in capital spending offset by cuts elsewhere (a large part of Osborne’s grand infrastructure plan) – “Given the overall fiscal impact of policy in these years is neutral, we have not made any explicit adjustment to our economic forecast.” I.e. no assumed effect on growth or unemployment.
- On ‘credit easing’ - “So, given these uncertainties, we have not adjusted our forecast at this time to reflect the impact of these policies, but we will consider them again at the time of our spring forecast when they are clearer.” I.e. Too uncertain to say at this point.
- On the new build indemnity scheme (designed to help revive the housing market and help first time buyers) – “The scheme is limited to 100,000 mortgages and we have assumed this will translate into around 30,000 more property transactions than would otherwise have taken place over the forecast period.” I.e. it will only increase transactions by 30,000 and 70% of it will be a dead weight loss.
- On the delayed rise in Fuel Duty – it will reduce CPI by 0.1% in 2012.
- On the ‘Youth Contract’ scheme to combat youth unemployment – “We have not assumed that the Youth Contract will have any effect on the overall level of
employment”. I.e. any extra youth jobs will simply be offset by less older people in work.
This is a pretty damning report – 5 high profile measures will result in 30,000 more housing transactions and 0.1% reduction in inflation with the rest subject to uncertainty.
The OBR really is proving its independence today.