Westminster

Valentine’s Day: Broken hearts or love hearts for UK economy

Valentine’s Day will mark the moment when Britain’s economic heart is broken or mended.

The Office of Budget Responsibility will judge on February 13 whether or not further spending cuts are needed in the Budget to save the UK from disaster.

It’s the big question that Treasury officials and budget holders across Whitehall are waiting to discover – will they face extra tightening so the government can meet its challenges?

No one knows their verdict.

But whatever the OBR says, Britain will know whether it’s at base camp of recovery or slipping into the doldrums by Valentine’s Day.

A ruling that the economy has not corrected itself enough will guarantee a miserable Budget with billions of pounds more taken out of the system through spending cuts.

It will be a further dose of misery following on from the autumn statement where Chancellor George Osborne announced cuts of £15billion, on top of the £80billion previously announced.

But optimists are hoping the OBR will give the UK a massive injection of cheer – ruling there is no need for further cuts and that our economy has rebalanced.

We will then see a far more traditional, old-fashioned Budget of a mid-term government in which the Chancellor will bring in tax reforms.

It will be at this point that the LibDems will push for the changes they want to personal allowances for the lowest-paid workers.

We are told that Mr Osborne has effectively ruled out any hope of cutting the 50p top rate of tax.

The Chancellor is currently on a three day tour of China, Japan and Hong Kong where he’s already bagged a significant victory for the City.

London will maintain its position as the world’s leading financial centre thanks to a new agreement that the Chinese currency will be traded here.

But it will be a harsh few weeks for Mr Osborne as the bank bonus season kicks in.

The Chancellor is keen to support the City but will come under intense pressure from Coalition partners to condemn the bonuses being paid to senior executives in the coming days and weeks.

And now that the government is not selling its share of RBS and Lloyds, ministers will be locked into the row over banks for years to come.

Written By

George Pascoe-Watson