Can George Osborne break free of events at crucial pre-Budget meeting?

 
Chancellor George Osborne

Today may turn out to be the day when the most significant economic decisions of the year are taken.

This is the day when the chancellor and a small team of senior civil servants and political advisers gather at his country retreat Dorneywood to discuss what to do in the Budget on 20 March.

Having battled their way through the snow, Team Osborne will find a warm welcome awaits at the Queen Anne-style mansion set in over 200 acres of Buckinghamshire countryside. The housekeeper will, no doubt, welcome them with tea and freshly baked scones by a roaring log fire.

But when the Treasury's top mandarin Sir Nicholas Macpherson makes his presentation, the news he will bring is likely to be as chilly as the weather outside.

Sir Nick, a languid old Etonian with a sardonic sense of humour, is a veteran of such occasions.

It was at Dorneywood in 2008 that the permanent secretary to the Treasury peeled an apple with his pocket pen knife and broke the news to the then Chancellor Alistair Darling that borrowing was set to rise over £100bn, Darling cheered himself up by going to a concert by that muse of the miserable Leonard Cohen.

Today the news looks scarcely more cheering.

The lack of growth has seen borrowing rise this year, not fall as planned; the target George Osborne set for repaying Britain's debt looks like a distant dream; the age of austerity has already been extended to at least 2018 and now the Institute for Fiscal Studies is warning of the need for £12bn in tax rises after the next election.

The question today is how will Osborne react. Up until now he has relied on the loosening of monetary policy by the Bank of England - which he hopes the new Governor will take much further - and schemes to encourage the private sector to invest in building homes and the nation's infrastructure.

Critics argue that he should allow borrowing to rise even further in the short term to directly fund capital spending. His answer has always been that an extra £10bn, say, of spending would produce no noticeable improvement in growth, whereas loss of fiscal nerve would cause panic in the markets.

On the face of it then, the chancellor has few options at Dorneywood. However, George Osborne will not want to appear to be like the other people who use his country retreat when he is not.

The house in which he and his advisers gather today is used to de-brief and to rehabilitate British citizens who have been held captive abroad. Many of the country's most famous hostages have stayed here before enjoying their freedom.

Will the Chancellor find a way to break free or will he leave Dorneywood a hostage to events?

 
Nick Robinson, Political editor Article written by Nick Robinson Nick Robinson Political editor

The Europe 'bomb' goes off

Douglas Carswell's defection to UKIP is a body blow for Prime Minister David Cameron, says BBC political editor Nick Robinson.

Read full article

More on This Story

More from Nick

Comments

This entry is now closed for comments

Jump to comments pagination
 
  • rate this
    -1

    Comment number 476.

    No474 Johnto,
    It will take more than gearing down. The fundamental problem will remain as long as incompetent,greedy elements within financial services remain in place.
    The thieving bankers, engaged in robbing their parents, children's charities, taxpayers and mortgage payers et al appear to be still ensconced in the 'City' sewers.
    Time for workers to get off their knees?

  • rate this
    -1

    Comment number 475.

    JB

    VAT is a beautiful tax as regards collection so, yes, I'm a fan. But 25% is too high. Would hurt people on benefits.

    SP

    Lesson there. Let's have Chancellors who are feckless spendthrifts in their personal life.

    Bryhers

    Small thinking for big problems. That, I agree, is a theme, both government and opposition.

    TB

    Redistribution IMO is all the more important if we're stuffed.

  • rate this
    0

    Comment number 474.

    The banks have to start gearing down,if they don't they will fail.
    The first country to recover will be the ones that start putting up interest rates there by pushing down the house prices,the middle and upper classes won't like it but thats the way it will go planned or not.

  • rate this
    0

    Comment number 473.

    # 468saga
    “That's quite amusing, John. I think you got the down ratings with the 25% VAT. That's about as popular as my 65% income tax. Would the courts allow 25% VAT by the way?

    Yes, the 25%VAT wouldn’t be popular, but earlier in the list I’d made the lowest paid 7% better off.

    Interesting to note though that VAT is 25% in the Nordic states…according to wiki??

  • rate this
    0

    Comment number 472.

    No459 Stan,
    Which one of 'Pasty George's' austerity measures is likely to be most effective in solving our current crisis?
    The IMM, and OECD both seem to be becoming less than confident in his policies.
    Do you agree that a consumer society needs consumers? is there a case for increasing aggregate demand, or indeed a massive redistribution of national income?

 

Comments 5 of 476

 

Features & Analysis

Elsewhere on the BBC

  • BlueNew blue

    Meet the artist, showman and inventor who created a colour that had never existed before

Programmes

  • Art installationClick Watch

    How one artist is using computer code to turn internet radio into a unique piece of music

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.