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In for a penny, in for £175 billion

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It may not be tax and spend exactly, but it’s definitely tax and borrow.

For the best part of 12 years, Labour has pursued essentially conservative (with a small ‘c’) economic policies, steadily underburdening itself of the ‘fiscally unreliable’ tag that some earlier Labour administrations were (wrongly or rightly) saddled with.

And for most of the past 12 years, as the global economy steadily expanded and Britain’s along with it, with aggregate wealth rising smoothly, Labour looked strong at the helm each time the budget came around.

But since the global economic crisis hit in late 2007,  it has become much harder for the government to keep a tight rein on the fiscal strings as growth has taken a hit, unemployment has risen sharply, and tax receipts have declined. 

Last April’s budget was a tough one for Labour, but Wednesday’s budget may well go down as the one that really showed the government reeling as it tries to keep a grip on the purse strings in some of the most challenging economic circumstances imaginable.

Another bumper Budget?

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All we’ve heard for the past few weeks is how little room there is for Labour to pump more money into the economy to fight the recession.

The increasingly popular — and confident — opposition Conservatives have gained ground by blaming Prime Minister Gordon Brown for turning the public purse into a public hearse.

from The Great Debate UK:

Little room for manoeuvre in budget

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--Gerard Lyons is chief economist at Standard Chartered. The opinions expressed are his own. Lyons will also blog his post-budget thoughts on The Great Debate.--

The outcome of this financial crisis depends on the economic fundamentals, the policy response and confidence. Chancellor Alistair Darling presents this Budget in an environment where the fundamentals are poor, confidence has been shot to pieces and the credibility of policy and his ability to spend any more is being widely questioned.

What do you want from the Budget?

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With Alistair Darling set to issue the gloomiest budget in a generation, nobody would actually like to be in the Chancellor’s shoes. But put yourself there for a moment and ask yourself, what would your Budget look like?

With a gaping hole in the country’s finances, Darling looks set to admit the economy will shrink at its fastest rate for 60 years. The Budget statement will also come just after new figures are expected to show another 120, 000 signed on for unemployment benefits last month.

from The Great Debate UK:

A short circuit for electric cars

REUTERS-- Neil Collins is a Reuters columnist. The opinions expressed are his own --

LONDON, April 16 (Reuters) - Poor old Alistair Darling. The Chancellor is girding himself to deliver a truly ghastly Budget, and lined up a crowd-pleasing headline-grabber to distract attention from the financial horrors ahead.

Then his colleague transport minister Geoff Hoon goes and grabs the headlines for himself, revealing plans to bribe motorists to ditch the gas-guzzler for an electric car.

from MacroScope:

Punctured Britain

If British chancellor Alistair Darling now occasionally tires of being reminded of his party's erstwhile promise of  "no more boom and bust", he won't thank British accountancy firm Grant Thornton  for sending journalists a bike puncture repair kit.

Billed as "Darling's economic repair kit -- fixes deflation in all business cycles", the marketing gimmick highlights the serious challenge facing Darling as he prepares to deliver his annual budget to parliament on April 22.

Sorry seems to be the hardest word

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    Alistair Darling may think it’s time for a bit of collective
responsibility, but anyone who thinks Gordon Brown is about to
apologise for Britain’s current economic travails should think
again.

    The prime minister, who loved to boast about abolishing boom
and bust when he ran the Treasury for a decade, is now
contending with the economy shrinking at its fastest pace in
nearly three decades and the prospect of millions out of work.

Sorry Darling, Davos is for Mandy

If there were any questions over who is number two in British Prime Minister Gordon Brown’s cabinet, Davos might have helped clear them up.

While Chancellor of the Exchequer Alistair Darling is giving the annual gathering of global big wigs a miss, business minister Lord Peter Mandelson has found the time to go.

Pre-budget report: what it means for personal taxes

Here is a guide on what the pre-budget report means for personal taxation by accountancy firm BDO Stoy Hayward. Income tax – changes to allowances and rates

The basic personal allowance for 2008/09 was increased above inflation from £5,225 to £6,035 as a one off measure to compensate for the loss of the 10 per cent starting tax rate.

Drawing up the Battle Lines

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Newspapers were in no doubt of the significance of the pre-budget report – this was a defining moment in British politics.

New Labour is no more, they announced, and prudence has been blown away by a massive gamble for the hearts and minds of the electorate before the next election.

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