A 'swings and roundabouts' Budget

This was a cautious 'swings and roundabouts' Budget at the macroeconomic level, but did find room for some positive measures at the micro level to helps exports, capital investment and savers.

While the OBR revised up its growth forecasts slightly in the short term, much as we expected, there were corresponding reductions in future years, including beyond the forecast horizon of 2018-19. Faster growth just uses up the spare capacity in the economy faster, with no real change in long term growth potential.

As such, headline public borrowing is a bit lower, but the structural budget deficit is little changed from the Autumn Statement in December or indeed last year's Budget. So the headline public finance numbers look better, but there is no real additional room for net giveaways. This was reflected in a Budget that made small net cuts to spending to fund small net reductions in tax, but did not change the overall fiscal stance in any material way.

In the long run, the reforms to pensions may be the biggest change in the Budget, but in the short term this actually raises money for the Chancellor. There are also increases in public service pension contributions that help to fund the above inflation rise in the income tax personal allowance, which is the biggest single tax cut in the Budget. Raising the national insurance contribution threshold might, however, have been a more effective way to help lower paid workers.

There were some positive measures to support business investment, exports and apprenticeships, as well as to cut energy costs for business. But, while welcome, the scale of these measures should be kept in proportion - they were not sufficient to cause the OBR to raise its growth forecasts in any material way.