Tuesday, June 08, 2010
A flurry of fiscal announcements
Posted by David Smith at 08:00 PM
Category: Thoughts and responses

The shape of the upcoming fiscal analysis and announcements is becoming clearer. On Monday the new Office for Budget Responsibility will publish a pre-budget assessment of the outlook for the economy and the public finances on Monday June 14. The growth forecasts are likely to be lower than those used by the Treasury in the March budget and the pace of the reduction in borrowing consequently gentler. Then, just over a week later, the chancellor will come along with his budget announcements and we should be able to see the difference. The budget will certainly reduce the borrowing profile, the question will be whether it cuts growth as well.

Meanwhile, George Osborne has set out the principles underlying the coming spending review. Britain's "brightest and best" will be employed in the effort to ensure that the public sector only does what it needs to, along the followig principles: Is the activity essential to meet Government priorities?
Does the Government need to fund this activity?
Does the activity provide substantial economic value?
Can the activity be targeted to those most in need?
How can the activity be provided at lower cost?
How can the activity be provided more effectively?
Can the activity be provided by a non-state provider or by citizens, wholly, or in partnership?
Can non-state providers be paid to carry out the activity according to the results they achieve?
Can local bodies, as opposed to central Government, provide the activity?

It sounds bold and exciting and there is more here. Will it work, or has the government got too many spending sacred cows? We'll soon know. Meanwhile Fitch, the ratings agency, got the markets excited by saying that cutting the deficit will be very tough. I think we knew that.