Cast your minds back to November 2015, when George Osborne was still chancellor of the exchequer and Brexit was merely a twinkle in Boris Johnson’s artful eyes.
Osborne was under pressure to scrap his proposed cuts to tax credits following an intense political storm. Fortunately for David Cameron’s right hand man, the government’s fiscal watchdog presented him with a £27bn boost to the public finances’ outlook – a “get out of jail free card”, as it was described at the time.
The then-chancellor, still buoyed by the Conservatives’ storming General Election victory, basked in the good fortune and used his Autumn Statement to loosen the Treasury’s purse-strings.
Just a few months later the picture had changed, however, with the Office for Budget Responsibility (OBR) slashing its forecasts for tax receipts. It was a short, sharp lesson. As OBR chief Robert Chote commented: “What the sofa gives, the sofa can also take away.”
It seems as if Osborne’s successor heeds this lesson. Upon entering Number 11 Downing Street last summer, Philip Hammond suggested he would be less tied to the idea of deficit-reduction than Osborne – but now he is making reassuring noises about the need to keep the public finances in good shape.
The UK economy has expanded healthily since the referendum, and some economists believe the outlook has brightened, giving Hammond leeway of around £30bn.
Read more: When, where and how to watch the 2017 Budget
Nonetheless, the global economic picture is still coloured with uncertainty and sluggish growth. A smaller annual deficit would help maintain the confidence of investors, and a stronger fiscal position will do us no harm during upcoming Brexit negotiations.
Hammond is understood to be acutely aware of both the risks ahead and indeed the lingering effects of past events. The government’s debt pile is still equivalent to more than 85 per cent of GDP – and even recently-improved predictions show the state spending £60bn more per year than it receives in taxes.
Last November’s Autumn Statement was, at times, mind-numbingly dull. There were patches when Hammond lived up to his Whitehall nickname of Spreadsheet Phil, steadily listing a modest series of investments with little sign of the bombast or the bunnies favoured by his predecessor.
Like all journalists, we enjoy a bit of drama here at City A.M. – but let’s hope we see more of Spreadsheet Phil today. Fiscally-responsible and statesmanlike Budgets may not produce as many headlines as the tinkering, interventionist statements of Osborne and Gordon Brown; they are, however, better for the country.