Yesterday’s Budget was always going to be an awkward mix between political positioning, policy ‘rabbits’ and economic finessing.
Yet despite the good news on faster than forecast growth, and several measures to help boost business investment, the bottom line take-away from the Office of Budget Responsibility is that growth over the next five yeas will be too dependent on rising household debt and a falling saving ratio.
Business investment will hopefully begin to play its part, but the outlook for exports is rather worrying.
Ahead of next year’s General Election, the challenge for all parties is to begin thinking about an economic strategy that delivers sustainable growth over the long-run.
Or as the OBR puts it:
“If productivity fails to pick up as predicted, the consumer spending and housing investment that has driven the recovery through 2013 could falter as the resources to sustain them would be lacking.”
