Perhaps chancellor George Osborne needs an emergency Budget after all

Julian Harris
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Chancellor George Osborne Delivers Emergency Budget
Osborne has held 14 budgets, including Autumn Statements, since becoming chancellor (Source: Getty)

Chancellor George Osborne took some flak for last week's anti-Brexit stunt, during which he unveiled an "illustrative" emergency Budget consisting of £30bn in tax hikes and spending cuts.

This sweeping phase of austerity would be necessary following a vote to leave the EU, Osborne insisted, due to the ensuing economic shock.

Economists were unimpressed with the proposal, however, while 57 Tory MPs issued a rebellious statement condemning their chancellor’s threat.

Whether you view Osborne's move as a legitimate fiscal concern or a cunning piece of scaremongering, perhaps it should have attracted less attention – because for six years now, the chancellor has been warning of widespread austerity while simultaneously failing to eliminate the government’s stubborn annual deficit.

In the most recent fiscal year (2015-16), public sector net borrowing came in at £74.9bn, the Office for National Statistics said yesterday – an increase of around £900m on its previous estimate.

The structural deficit, unless we forget, was supposed to have been whittled down to zero by 2014-15, according to Osborne's original emergency Budget back in 2010. We were also told that the national debt would peak at 70.3 per cent of GDP in 2013-14, yet here we are, half way through 2016, and the government is still adding billions to the pile. National debt is now the equivalent of 83.7 per cent of GDP.

Most alarmingly, borrowing in the current fiscal year is actually higher than at the same stage 12 months ago (by around £200m) – and that's not because of weaker income from taxes. Receipts rose in April and May, but so did spending. Central government expenditure climbed £2.4bn compared to the same two months in 2015.

"It was imperative that the chancellor put public sector finances at the top of his priority list," said Ross Campbell from accountancy coalition ICAEW yesterday. "[But these figures] illustrate that he has done quite the opposite and has taken his eye off the economic ball."

Osborne enjoys a Budget – he has held 14 of them, including Autumn Statements, since becoming chancellor – so maybe he should announce another one irrespective of the referendum, and use it to outline exactly how he plans meet his self-imposed fiscal targets.

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