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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.

from The Great Debate UK:

The devil will be in the Budget detail

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fay-- Fay Goddard is chief executive of The Personal Finance Society. Any opinions expressed are her own. --

Though it’s a cliche to say that a budget is eagerly awaited you can be forgiven for saying so this time around. This year all eyes and ears will be focused on the Chancellor’s economic figures and forecasts. The big question is how will he balance the books – cut public spending or raise taxes? In the run up to an election cuts are ideal but needs must. What will it mean for personal finances?

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

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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.

The Bank of England enters the political arena

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Gordon Brown has not said openly that he plans to turn on the taps again in the budget with another package of spending and tax cuts, but his appeals to world leaders to do just that have led to a widespread feeling that more stimulus is to come.

So Mervyn King’s warning against more spending when debt levels are already so high has predictably been leapt upon by the Conservatives as a powerful message of support for their own position. 

Mervyn King’s warning to the government

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The unusual foray into politics by Bank of England Governor Mervyn King, in suggesting there should be no more tax cuts or spending rises in next month’s budget, has been widely interpreted by the newspapers as a blow to Gordon Brown but a source of secret satisfaction to the Treasury.

Chancellor Alistair Darling, several say, was not happy with Brown’s reported budget plans to offer voters more jam before they had digested the 25 billion-pound fiscal package in last Autumn’s Pre-Budget report.

Brown needs Darling in these troubled times

    One thing looks certain after Alistair Darling’s speech to***the Labour Party conference on Monday — he’ll be Chancellor of***the Exchequer for a while yet.******    Prime Minister Gordon Brown is expected to reshuffle his***ministerial team next week and there’s been a lot of speculation***that Darling could lose his job and be moved to another***department.******    The silver-haired finance minister has had a rough ride***lately. The economy is on the brink of recession and his***comments in a magazine interview saying the economic challenges***were the greatest in 60 years caused a furore and were blamed***for sinking the pound.******    But delegates at the Labour conference today just loved him.***They stood and clapped and then they clapped some more after***Darling hit out at unfettered capitalism and the huge payouts***given to bankers that he said helped cause the credit crunch.******    Darling looked genuinely embarrassed. He called for them to***stop but the delegates just went on. Besides modesty, the***finance minister had another reason for wanting them to stop.******    He had another type of conference call to attend to. A G7***one. The finance ministers and central bankers of the rich***nations club were having a hastily-arranged telephone chat at***1230 London time to discuss the latest bout of market turmoil.******    Given London’s position as one of the world’s top financial***centres, Darling could hardly miss out and he rushed off the***stage to get on with his G7 buddies.******    The crisis also looks to have cemented Darling’s position.***It would seem odd to remove the finance minister when the whole***world financial system is in the middle of the biggest upheaval***in a generation.******    With Brown making his economic experience a key selling***point, he needs Darling on side.

Could you live on a pound a day?

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pounds-in-hand.jpgWhen Kath Kelly complained to friends in the pub she was so broke she couldn’t afford a wedding present for her brother, she decided to take drastic action.

She made a bet that she could defy the credit crunch and live on just one pound a day for a year.

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