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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.

But there are a few reasons to suspect that when finance minister Alistair Darling steps up to the dispatch box tomorrow, he will deliver another blockbuster life-support package.

Yes, there are inklings of a recovery out there — some experts say we have reached the bottom — but Labour has to make sure this recession is long gone before it can hope to win an election.

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.

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. 

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