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Last Updated:  Wednesday, 9 April, 2003, 15:15 GMT 16:15 UK
Budget dullness cloaks Brown's gamble

By Nyta Mann
BBC News Online political correspondent

As even Gordon Brown's most fervent backers conceded, it was one of the most boring Budgets they have sat through - thin on announcements, effectively neutral in cash terms.

Trimming health spending plans was not an option
But that dullness cloaked a significant gamble: that the economy will do a lot better in the medium term than most economists expect.

This was the most difficult Budget of Mr Brown's career so far.

His previous Budgets have left Labour MPs marvelling at his feats of fiscal magic, as clever planning and good fortune combined to let him trumpet an economy out-performing his own predictions.

The trick he had to pull off this time was how to manage bad economic news while cheering his own side.

Prudence says borrow more

As widely predicted, for a second year running he had to confess he was over-optimistic about how the economy would grow.

But there was nothing chastened about Mr Brown's manner when he did it.

He contrived instead to make a virtue out of his need to borrow billions more than he originally forecast in order to meet the boost to health spending set out last year. It was, he insisted, only "right and prudent" to do so "at this point of the economic cycle".

Trimming those huge increases in spending was never an option, given that the extra investment in public services has been the central theme for Tony Blair ever since it was announced.

Neither was any kind of "stealth tax" rise - a method Mr Brown has frequently resorted to in the past but much more difficult since voters became more acutely aware of them.

So borrowing was always set to be the way the chancellor would fill the gap in public finances opened up by tax receipts and growth having both come in lower than he forecast.

The gamble lies in Mr Brown's bet that the economic news from later this year is not going to be nearly as bad as the economists are predicting.

The Treasury insists that the US economy will recover much more strongly than most expect, while, it says, consumer spending at home will suffer only a modest slowdown rather than the sharp fall some foresee.

Cheap rabbits

Of course, he produced the obligatory rabbit out of the hat that has by now become a customary part of every Brown Budget.

That role was filled this year by the trust fund for all new babies and benefits for pensioners - measures that will delight all Labour MPs, and continues his efforts to make up for the disastrous 75p rise in pensions that helped badly damage Labour among its natural supporters.

But these amount to very cheap bunnies indeed in public finance terms.

The real drama hidden amid this low-key Budget is one that will unfold slowly in coming months: whether Mr Brown's sums, after being proved wrong twice in a row, will add up this time.

If they do, he is once again the chancellor who triumphed over his critics and set a smooth path for Labour to win an unprecedented third term.

Get those sums wrong, and Mr Brown could face the nightmare scenario of going into the next election having to raise taxes.


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