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from The Great Debate UK:
Little room for manoeuvre in budget
--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.
There are three key areas to focus on in this Budget. First, the Chancellor's economic assessment. Second, his fiscal sums and how he can afford any further help to the economy. Third, his longer-term ambitions, aimed at reducing the budget deficit without killing the recovery whilst winning over the electorate and the markets. It is often said bad things come in threes. On the eve of his Budget, Darling will know that only too well.
First, the economic outlook. The Treasury often views The City's forecasts as being too pessimistic about growth and too optimistic on the budget deficit. This time, the market's growth expectations are terrible, and rightly so. People and companies have cut spending agressively, and the economy looks like it will decline anywhere between 3 percent to 4 percent this year.
What do you want from the Budget?
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
-- 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
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.Â
Mervyn King’s warning to the government
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?
When 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.
Brown’s tax U-turn: new beginning or beginning of end?
Gordon Brown on Wednesday made what the British media and opposition parties widely judged to be the most humiliating and embarrassing policy change of his short career as Prime Minister: a climbdown over concessions to those made worse off by his scrapping of the lowest, 10 pence income tax rate.
Conservative leader David Cameron, hoping to oust Brown and Labour in the next election, branded Brown a “pathetic” figure. Liberal Democrat leader Nick Clegg called him “increasingly pointless”.
Is curry the latest for the spending chop?
The Friday night take-away, Saturday shopping spree and summer get-away are in line for the chop, as consumers become increasingly nervous over looming recession. Almost nine out of 10 Britons say they will cut spending on non-essential items to cushion themselves against impending economic downturn, according to a poll of 1,000 people for Web site Fool.co.uk.
A British institution — the good old take-away — is set to receive the biggest blow, with over two-thirds of the nation planning to cut back on curries, fish suppers and late-night kebabs, the survey says. Other planned cutbacks include retail therapy (67 percent) and fewer holidays (49 percent), while 12 percent plan to stop smoking, 4 percent to put pension contributions on hold and 3 percent say they will even cut their kids’ pocket-money.
The pensions runaway train gathers speed
Few people are more on the pensions money than Scottish Life’s Steve Bee. And he has some strong views in his latest “BeeHive” post following publication of our exclusive story on the soaring costs of setting up “personal accounts” — the government’s brainchild aimed at solving a looming pensions crisis.
Reality seems to be kicking in early on in the dream, says Bee, who finds the whole thing “really depressing”. A chink of light amid the gloom came in this week’s Budget, he says: the extension of the ability of pension fund managers to allow trivial commutation of small pension pots should make things easier and cheaper for occupational pension schemes. But, sadly, such rights are not to be extended to personal pension schemes, a move that only serves to “drive a horse and coaches through the whole idea of our having one simple set of pension rules for all types of pension scheme”.
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The Wall
