The "Play it Safe" Pre-Budget

My early impression of the pre-budget report is that it is Gordon Brown expecting to make the transition to Prime Minister almost by default and not wanting to risk any new policies which might endanger that.

As such, we saw a fiscal tightening but only a minor one, 0.2%, which will keep him within his rules but not do a significant amount to improve our fiscal situation now or prepare for the longer term challenges which Feldstein addresses today (he argues that immigration can't solve the problem for us). As such, the FTSE pretty much ignored the budget.

There are new green taxes as they have become the new politically safe way to raise tax without creating nothing but enemies. However, note that these are further changing our competitive position in industries like air travel and any requiring extensive road travel. The changes, even here, are rather expected though and BA's share price has not changed much.

His education and skills moves are a fairly straight line from the last budget and are a fairly unimaginative response to the poor UK productivity performance under Brown's stewardship.

What he didn't do was anything significant about pensions, the NHS, business taxation etc. etc.

He announced increased the funding for catching minimum wage evaders which is a little comic given the Labour Party's recent scandal over their unpaid film student.

I think that the most interesting thing about this budget was what it tells us about Brown and the style we might expect from him as Prime Minister. Possibilities like a snap election seem increasingly implausible from a man who does not appear to be a risk taker when he had the opportunity to do something like cut business tax which might have made Cameron's position colossally difficult. This huge clunking fist is not a nimble one and I am hopeful Cameron can dance around it with ease.