A big day at Westminster
Never has so much been leaked to so few for the consumption of so many!
If the hectic government briefing of the last 48 hours is anyway accurate, we already know the main substance of today's Emergency Budget (which is what the Pre-Budget Report has become): (to 15%), pressure on banks to keep lending to business and home-owners, deferment of some tax rises (from small-business corporation tax to fuel duty), rollover of this year's £120 income tax cut -- oh yes, and massive tax rises to come after 2010 to reduce the massive budget deficit which will result, including (according to last night's leak) an
This latest leak gets all the newspaper headlines this morning -- which means we should beware. The Chancellor will this afternoon announce he plans to borrow around £70 billion this financial year (08/09) and maybe as much as £120 billion in the next (09/10). The Prime Minister's regular claim that Britain is better placed than most to meet the economic crisis is likely to be challenged by him borrowing more than most -- up to 8 or 9% of GDP.
These are massive sums and to bring the deficit back to anything like normality will require taxes to rise after 2010 and public spending to be squeezed. But a new 45% top rate will bring in merely an extra £1.5 billion (if that), which won't even meet the additional interest payments on the extra borrowing.
So this afternoon we will have to be careful not to be deflected by the headline grabbing stuff -- the immediate cut in Vat, the future rise in the top rate (if Labour is re-elected) -- and look closely instead at what the Chancellor proposes to do to bring the deficit back to around 2% of GDP in the years after 2010 -- which will require tax rises for everybody (not just the 400,000 who would be affected by a 45% top rate) and eye-wateringly tight public spending controls, which in some areas will mean real cuts.
The Chancellor will not be able to fudge these measures or remain suitably vague. If the markets don't see a credible plan to return the budget to balance in the years to come after today's emergency measures, then sterling and the stock market will slump even further. On top of financial meltdown and recession, the government would be faced with a full-blown currency crisis and an inability to raise its borrowings in the credit markets -- something it could most certainly do without. In effect, we will have two budgets this afternoon: one of immediate tax cuts and extra public spending, the other of deferred tax rises and a squeeze on public spending to come.
This is a Big Day at Westminster and we'll bring you live all you need to know, starting with the at Noon on 91Èȱ¬2, when we'll have the latest speculation and analysis with three leading politicians: former Cabinet Minister Ruth Kelly for Labour, Conservative former Cabinet Minister John Redwood and the Lib Dem's quick stepping Treasury spokesman Vince Cable.
We'll also have the results of our exclusive Daily Politics Poll, conducted by ComRes over the weekend, on which of the main parties is most trusted to steer the country through this troubled economic times. Sangita Myska will be live in Leeds with the people that count - you the shoppers! And you can e-mail us your views at daily.politics@bbc.co.uk (don't forget to sign up for our webmail on the latest programme at bbc.co.uk/dailypolitcs).
Then we'll be back at 3pm to give you a ringside seat for the most important Budget in a generation. We'll have 30 minutes of build up with the 91Èȱ¬'s Robert Peston and Nick Robinson, then we'll go to Commons at 3.30pm to bring you live and uninterrupted coverage of the Chancellor's statement. He's expected to speak for about an hour and once he's sat down we'll bring you the best analysis and comment from our top journalists, leading politicians and City commentators about what it all means for you.
So stay ahead of the game and join us for the Daily Politics at Noon on 91Èȱ¬2 then again for our Budget Special on 91Èȱ¬2 and the 91Èȱ¬ News Channel from 3pm onwards. How could you miss it?
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