The Spring Budget Background

A year ago, nobody – including Mr Osborne – expected the 2014 Budget to be set against such a relatively benign economic background for the UK. In March 2013 the talk was of a triple dip recession, as the country had just recorded a contraction of 0.3% in the final quarter of 2012.  Inflation, as measured by the February 2013 Consumer Prices Index (CPI), was running at 2.8% and had been above its 2% target since December 2009.  In Europe the latest round of the Eurozone crisis was taking place, with Cyprus becoming the fifth EU member to seek a bailout. All in all, it was not a pleasant economic backdrop against which to present another austerity-as-she-goes Budget that promised a further £100bn+ government deficit for the coming year. (more…)