The Budget - Part 1: Borrowing
Everything you needed to know why Labour cannot be voted into power in the next General Election came about today.
What does their manifesto mean? Nothing. Income Tax rises.
What do their forecasts mean? Nothing. Growth wrong, unemployment wrong...
What do their measures mean? You can deal with it your finance shortages later.
The Chancellor is out by a massive 15% on the expected borrowing of the 2008-09 financial year on a prediction he made 6 months ago (£90bn rather than £78bn). If he can't predict the level of borrowing, which he enjoyed full control over, in the past 6 months with any accuracy then it is unthinkable that he can predict with will happen to GDP which is subject to only his influence and not direct control.
Do not believe a word of it. We will be lucky if Alistair Darling only pollutes our economy to the tune of an extra £175bn in the 2009-10 financial year. Variance to the magnitude of his last prediction would take it over £200bn. You have been warned.
Then there's the question of the price of that future borrowing. People don't just lend the government money. They buy bonds and gilts which promise future returns. If there is no trust in the Chancellor and his vision of the economy then they are going to expect bigger returns on their risky investment in the government.
With only a few shaky calculations at this early juncture we can see ourselves harbouring 100% GDP of public debt rather than the predicted figure of 79% for the parliament after next. A crazy peace time situation.