Post Austerity - what are the priorities?

So, great news, the UK public borrowing has finally reached the point where, though still in deficit, public borrowing is growing at less than the rate of inflation times GDP growth - i.e. the share of debt is finally falling. As an aside, it is so good to see that much of this benefit is from big jumps in corporate tax, paying far more as rates have been reduced in a real life laffer curve example.


So, building on Mr. Drew's post of yesterday, what should the Government increase spending on? The NHS, already eating a huge amount of government spending, has already been promised more money. There will be a contingency for Brexit too no doubt, given the Chancellor is a complete eyeore on the subject.


But, for the few pennies left over what is in most urgent need of more central funding. If Labour come to power, the splashing of loot all over the place will mean no priorities at all and the rather pleasing graph above will head back northwards once more. But, for the next 4 years, what should the focus be?


Home Office - crime fighting, law and immigration
Education - more schools and teachers or early learning (even to restore the EMA), student loan reductions
Trade and Industry - an industrial policy, or space
Infrastructure - renewal or roads and large water/power projects or social housing projects
Local Government - starved of revenues the most due to austerity
Defence - especially against cyber and counter-terrorism


So many choices and so little extra money, it needs to be spent wisely and with a view to helping those who may choose to vote Tory at some point. To me this means perhaps something on student loans and also law and order. Student loans have proved fatal for the Lib Dems and if the Tories ignore it perhaps they will catch a cold too. Law and Order is crucial to an advanced civilisation, failure to both control crime, administer justice and control the borders is on a par with failing to have an army to defend the realm. For me these would be the most propitious, but what do I know - far more interested in what you think in the comments

Summer Budget: Open Thread

Will update later with any details but so far it seems to be the usual,  'not has hard as we are portrayed are we?' attempt along with some fiddling around the edges and finding ways to avoid real cuts where possible...middling...what do you think?

Government Borrowing on track

It is a small story really in today's world of a collapsing Spain joining u-bend bound Italy, Greece and Portugal. But yesterday the Government did announce that despite the economic downturn this year, it is still on track to meet its deficit reduction targets for 2011/12.

Which is quite some achievement, and in fact has only happened because £4 billion of extra taxes have been unexpectedly collected (pity those taxpayers). However, as always, the really interesting bit is the lack of actual, er, cuts. Indeed the usual suspects of Health, Education and Social Care are being restricted to just 1% growth on last year  - but the overall spending is still going up. The rate of increase is being reduced and taxes are coming in to help change the balance, but we are still some way off seeing any actual reductions.

I suppose we should be grateful for small mercies and with inflation at 5% real-terms cuts are being made, if not nominal. We are though a long-way off actual cuts though - who would have thought it if you just watched the BBC and read the papers?

The really good news though is that timing is everything. As the Eurozone collapses with shambolic new apolitical Governments all the rage, UK Gilts are currently trading ever more cheaply as investors flee an area where there is no fiscal or monetary certainty for one that has a plan and is following it through.

Here is something you won't see me write very often; well done George Osborne.