Thread by @EdConwaySky

🧵Few things to look out for in tomo’s Budget/Spending Review.
First, economic growth forecasts
They will almost certainly be raised - but by how much?
As you can see we are already running above the levels forecast in Mar. But when if ever do we get back to trend (dotted line)?

Given it’s a Budget we’ll doubtless have more taxes. But actually most of the action on this front has already happened. The Corp tax and NICs increases represent the biggest combined tax increase since the early 1990s. Seems unlikely anything tomo will change this big picture

It’s already been leaked that @RishiSunak will freeze fuel duty.
One can understand the rationale given soaring petrol costs.
But it’s a v hard one to square with govt’s green pledges. This is the UK’s biggest green tax!

Most likely is if the Chancellor does freeze fuel duty he announces a host of incentives for electric cars alongside it. But it’s still somewhat discordant, coming the week before COP. If UK is too scared to raise this tax on emissions then what hope of reaching net zero?

But perhaps the most consequential thing tomorrow is the Spending Review. It’s the first multi-year SR since 2015. And given all @George_Osborne’s SRs were really austerity reviews (largely abt NOT spending), it’s the first “proper” SR since the Gordon Brown era. (chart: @theIFS)

With that in mind, a v quick primer about what on earth the spending review actually IS.
In short: it sets departmental spending totals for the coming three years. The key word there is “departmental”. Why? Let’s remind ourselves where the govt actually spends our money…

Here’s ALL govt spending in the latest year for which we have data: just over a trillion quid.
Well over half of that is spending that can’t easily be controlled year-on-year: debt interest, pensions, welfare etc. The blue bits here - technical name Annually Managed Expenditure

The Spending Review is only really focused on the RED bits here - “departmental spending”.
If we pull them out you see departments spend 385bn on day-to-day costs (wages etc) and 100bn on capital investment (broadband, roads, hospital buildings etc).
Those figs are going up...

So take day-to-day (resource) spending. It's going up by £56bn. But we already know £14bn is going on the NHS (that announcement last month). We know about £6bn shd go on schools/aid. So the SR is really about what's left: £36bn. Who gets that?

Certainly, for some depts the settlements will be disappointing. While this SR isn't all about cutting, many depts still have real terms budgets way below their 2010 levels. Aid is no longer as generous as during the Cameron era. But nonetheless: this is not an austerity SR.

So perhaps the most interesting thing we'll learn tomorrow is: what does a Tory chancellor do when they have the opportunity to spend money rather than slashing it? It's really the first time we'll have had an answer to that question.

Of course there will be plenty of other stuff too: new fiscal rules most probably, something on business rates, specifics about some of the capital spending plans (tho I'm told HS2 strategy won't get announced tomo). Not to mention the inevitable rabbits 🐇.

Today is @RishiSunak's third Budget. But it might be his first proper Budget. A few things to look out for in today's bit political event news.sky.com/story/budget-2…