| 14.7°C Dublin

Britain can take a few budget risks - we can't take any


Chancellor of the Exchequer George Osborne outside 11 Downing Street, London, before heading to the House of Commons to deliver his annual Budget statement

Chancellor of the Exchequer George Osborne outside 11 Downing Street, London, before heading to the House of Commons to deliver his annual Budget statement


Chancellor of the Exchequer George Osborne outside 11 Downing Street, London, before heading to the House of Commons to deliver his annual Budget statement

When it comes to mastery of language, George Osborne does not bear comparison with Oscar Wilde or even Bill Clinton.

"The comeback country" will not join the list of famous phrases. "Britain can walk tall again" is only a cliché.

But when it comes to managing a country's finances, the chancellor of the British exchequer knows all the tricks of the trade, like giving with one hand and taking with the other. On Wednesday when he presented his budget - the last before the general election - he excelled in both operations.

And whether by luck or judgement, his timing was perfect. A popular budget only seven weeks out from the election! Will it put the Conservatives back in office? The bookies have already cut the odds, a sure sign of how they view it.

And this side of the Irish Sea, some of our senior politicians will be paying particular attention.

There are good things in this budget, like help for small savers and (maybe) affordable adjustments in taxation. And a penny off the pint. Plus, in case you hadn't noticed, 2p off a dram of Scotch.

Will these measures change anybody's life?

The distillers think so. The anti-booze organisations, on the other side of the question, are furious. This won't bother Osborne, who thinks in billions, not pennies.

What bothers myself is the pattern to which he has adhered.

Five years ago, he undertook to halve the deficit in his term of office. In the real world, it has continued to grow. A familiar state of affairs, here as well as in Britain. Hardly had he finished speaking on Wednesday than the official budget watchdog warned of a roller-coaster ride in mid-term. Somehow that sounds familiar too.

That said, Britain today is far more comfortable than it was during the reign of Gordon Brown as chancellor and prime minister. More people are at work than ever before. Osborne plans to extend the economic recovery to the still-suffering North of England, though you have to take this one with a grain of salt.

And what is good for Britain is, by and large, good for Ireland. We need no reminding of the colossal importance of our trade with our nearest neighbour. We do, however, need constant reminding that Osborne's over-optimism is mild by comparison with the way some Irish leaders talk about our own genuine but limited recovery.

Here and elsewhere, one often hears that the recovery proves that "austerity works". But austerity was far from the only factor involved.

In two of the countries that have come best through the crisis - the United States and the United Kingdom - "quantitative easing" (in layman's terms, printing money) played an important part. That option was not available to Ireland. Another was what the Americans call dumb luck, lately exemplified by the fall in oil prices.

Luck can turn, and often does. We should note the Americans' current caution. The time seems right to raise interest rates. But Washington decided this week to wait a while.

Nothing will be lost by the Federal Reserve's caution, but a great deal could be lost if the European Union's plan to wage war on tax avoidance is mishandled.

On this question, I thought the timing of Osborne's 'Google tax' very curious. Did he time it deliberately to coincide with the European move? Or did he want to demonstrate British independence by producing a different set of proposals from those of Frankfurt?

Since the advent of Mario Draghi, the European Central Bank has become an institution in which we can have some real confidence. It has now come up with detailed proposals, featuring - centrally - the sharing of information between states.

This can work. Indeed, it must work. The current level of avoidance is undermining the whole system.

The French European commissioner, Pierre Moscovici, says that "tolerance has reached rock bottom". So it has, but the fight to abolish aggressive tax avoidance will be long and bitter.

How well prepared is our own Government for the struggles to come? The many notable events this week included speeches from the Taoiseach (in America) and the Tánaiste.

Enda Kenny, speaking firmly and at some length, declared that we will continue on the prudent fiscal path.

Joan Burton said that we should seek a relaxation of the European spending rules.

This strikes me as a total contradiction. Prudence and easement are not compatible.

We have already seen a flood of demands for what amounts to lower taxes and higher spending. With our own general election on the horizon, they will be hard to resist.

But they must be resisted. George Osborne can afford to take a few risks. Michael Noonan cannot afford to take any.

Irish Independent