According to Guy Foster, head of research at Brewin Dolphin, the Chancellor has various ways of responding to his setback, including compensating for the shortfall by raising the personal allowance or national living wage or more severe cuts to departmental budgets. Another possibility he said, is that he could use “a little of the fiscal wiggle-room, which he built into his plans in the emergency Budget that followed the election – he said he is aiming for a £10 billion surplus by 2019/20 but under the terms of the charter he introduced, he need only balance the books..
“Given the imperfection of all of these options his best option may be to do a little of all of them,” he said.
Indeed, it could be argued that that sense of imperfection is one that pervades more than just the options available to Osborne on the tax credit side – the shadow of the global financial crisis remains clearly visible, while the QE-fuelled liquidity that followed it has placed the world in unchartered territory. In the UK, while the recovery continues, the lack of productivity remains a concern and one that is only made worse by both public and private debt levels.
In such a context, perhaps a bit of a simplicity, a period of reflection and deep breath is exactly what is needed in something like an Autumn Statement.
