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The Guardian - UK
The Guardian - UK
National
Andrew Sparrow and Graeme Wearden

George Osborne delivers 2016 budget – as it happened

Osborne announces soft drinks sugar tax and tax-free personal allowance – budget highlights video

Political summary: OBR gives Osborne a score of one out of three

This budget will be remembered for the sugar tax - which not only caught pundits by surprise (not least because they had made the mistake of believing briefing to the effect that it was off the table) but also allowed George Osborne to indulge his inner “big state” interventionist - but it did not feel like a big, transformative one. Lifetime ISAs could potentially have a significant effect on the pensions industry, because Osborne is giving 20-somethings an alternative to saving in a pension, but it is equally possible that they will be abolished a few years down the line because they prove too expensive (like child trust funds). The business rate cuts will make a difference to small shopkeepers, some of the devolutionary measures were probably welcome (unless you work in a council education department, where “every school an academy” could put you out of a job), but generally, as budgets go, this was nearer the routine end of the scale than the historic.

In a budget which involves a modest fiscal tightening this year Osborne also managed to announce proper tax cuts; a rise in the basic rate tax allowance, worth almost £2bn by 2020, an increase in the higher rate allowance worth £600m by 2020, and a cut in capital gains tax, worth £735m by 2020, that will mainly benefit shareholders. Osborne does not produce the transparent distributional analysis that he did in the last parliament - he explains why here (pdf) - but presumably the Institute for Fiscal Studies will enlighten us tomorrow. There are already claims that the top 10% of households will get a third of the benefit from the income tax cuts. Meanwhile the disabled will lose £1.3bn by 2020 from the cuts to the Personal Independence Payment.

The big story is probably in the overall economic figures which, overall, are grim for the chancellor; there is a £55bn black hole in his finances. As the Resolution Foudnation’s Torsten Bell says, Osborne has discovered that “what the sofa gives, the sofa can take away”. And his record on his fiscal targets is dismal. In a cheeky move, the Office for Budget Responsibility has even tweeted his current scorecard: one out of three.

The main consolation for Osborne is that most people aren’t interested in fiscal targets and whether they are met or not and that in a few years time, if he’s still chancellor, the numbers might look different. But for the moment triumphalism would be best avoided.

That’s all from us.

Thanks for the comments.

Updated

Economic summary: Productivity woes linger

What have we really learned about the UK economy today?

1) The UK is in worse shape than we thought. The fall in productivity since 2008 is one of the things that keep brighter economists awake at night. So the OBR’s decision to downgrade our potential productivity is a pretty serious blow. It suggests wage growth, tax receipts and employment growth could all be weaker in the long run, undermining the country’s ability to tackle issues such as the ageing population and the loss of jobs to automation (the smart robots problem).

2) We’re more vulnerable to a global downturn. Growth is expected to be lower every year until 2020, at a little over 2% per year. So if another financial shock strikes, Britain could easily be pulled back towards recession.

3) Will tomorrow cuts actually happen? As covered earlier, the chancellor is relying on a lot of financial jiggery-pokery, and a nasty austerity squeeze, to eliminate the deficit by 2019-20. Spending and tax revenues have been shunted around in a quite confusing way, all to (apparently) wipe out borrowing as demanded by the Fiscal Charter.

This means George Osborne can avoid breaking all three fiscal rules today. But some City economists are already doubting whether the government would really be so tough in the run-up to a general election:

Tim Drayson, head of economics in Legal & General’s Multi-Asset, reckons the Osborne is crossing his fingers:

There is clearly some hope that by the time this year is reached, the public finances will be in a stronger position as it is doubtful the government would wish to tighten fiscal policy this aggressively ahead of the 2020 general election.

Duncan Weldon, who has swapped the Newsnight studio for the relative peace of the Resolution Group, is also doubtful.

So all this talk of “acting now to avoid paying the price later” may prove to be hot air. But that may be the next chancellor’s problem.....

Updated

The head of the OBR, Robert Chote, is on Sky News now - explaining that the 2019-2020 surplus is far from guaranteed:

What the OBR says about Brexit

The OBR says in its report that it has to base its forecasts on current government policy; that means it is not its job to estimate what impact Brexit would have, it says.

But it also adds this:

Whatever the long-term pros or cons of the UK’s membership of the European Union, a vote to leave in the forthcoming referendum could usher in an extended period of uncertainty regarding the precise terms of the UK’s future relationship with the EU. This could have negative implications for activity via business and consumer confidence and might result in greater volatility in financial and other asset markets.

Our expert columnists have given their verdict:

In it, Gaby Hinsliff argues that George Osborne may have outlined his legacy today, even if he didn’t mean to:

This budget felt strangely like a pre-election one, aimed at suburban swing voters – they’ll love the cheap petrol and after-school sports clubs in Nuneaton – perhaps because it is. Once the EU referendum is over Tory MPs will move on to pondering the succession, with the most restless predicting a handover as early as 2018 to give the new leader time to settle in. So Osborne made his pitch – a vision of a small-state, low tax Britain that rewards work and has nothing much to say to those out of it – with brisk clarity.

There was an odd moment when, introducing the sugar tax, he said he would never forgive himself for not doing something about childhood obesity while he could. It was as prime ministerial as he has ever allowed himself to sound. But there was no warmth in the reception from Tory backbenchers, merely cool respect for the way he ticks electoral boxes.

The BBC’s Laura Kuenssberg spots trouble ahead:

The Press Association’s Ian Jones has posted two quite useful tweets, on where George Osborne gets his money from:

And what he spends it on:

Bloomberg backs sugar tax

Michael Bloomberg, the US business magnate and former New York mayor, has just tweeted his support for the sugar tax:

Bloomberg has been campaigning for similar measures in the US, with mixed results. In 2013, a US appeals court overturned his attempt to ban New York restaurants from selling extra-large sugary drinks.

But he had more success in California, helping the state implement America’s first tax on sugar-sweetened drinks in 2014, despite opposition from the beverage industry.

Updated

Treasury clarifies Osborne's comments and says maths won't be compulsory for all under-18s

In his budget speech George Osborne said:

We are going to look at teaching maths to 18 for all pupils.

You might think that might involve getting all pupils to study maths until they are 18, but it doesn’t; the Treasury has had to issue a clarification, as the Press Association reports.

A Treasury spokeswoman clarified the chancellor’s comments made during the Budget announcement, adding that he had not promised to make Maths compulsory for A-level, but is looking to improve teaching of the subject across older age groups.

The review will be carried out by Professor Adrian Smith, and will look into how schools can improve and increase the uptake of students choosing Maths as an A-level subject.

What’s happened to Robert Peston since he went to ITV?

OBR says universal credit 'one of the largest sources of uncertainty' in forecasting welfare spending

The OBR also says it has identified “new sources of significant concern” trying to assess the impact of universal benefit (the new benefit still being rolled out nationally) on welfare spending.

Forecasting the impact of universal credit requires capturing changes in six legacy benefits within an entirely new benefit, where the timing of the transition from legacy benefit to universal credit has large effects on spending. Modelling these effects is a significant challenge that requires the transfer of data, expertise and evolving policy designs across departments ... We continue to work with DWP on how best to forecast universal credit, but this should be considered one of the largest sources of uncertainty in our forecast for welfare spending.

OBR says introduction of PIP has saved less money than expected

In his budget speech George Osborne said government spending on disability benefits was rising. He made the point to partially justify the cuts to the personal independence payment (PIP) that will save £1.3bn by the end of the decade.

The OBR report (pdf) helps to put this in perspective. It says the government is spending more money on disability benefits partly because its attempt to cut costs by moving from the disability living allowance (DLA) to PIP has been less successful than planned.

Not for the first time, we have revised up our forecast for spending on disability benefits because the transition from DLA to PIP has saved less money than expected.

The OBR says it was originally assumed that only 80% of claimants being reassessed as they moved from DLA to PIP would carry on receiving all their money. But the rate is now 83%. And new awards under PIP are also 16% higher than planned.

Small print alert: Relief for non-doms?

The chancellor appears to have thrown a bone to non-domiciled individuals who are being forced to pay tax in the UK.

Last summer, George Osborne announced that non-doms (whose tax residence is overseas) will be subject to UK tax law if they’ve lived here for 15 of the last 20 years.

Today’s budget statement (page 99) states that this will kick in from next April:

Budget 2016 confirms that non-doms who become deemed-domiciled in April 2017 can treat the cost base of their non-UK based assets as being the market value of that asset on 6 April 2017.

And that means they could avoid paying capital gains tax on the sale of non-UK assets, even if they bought them two decades ago!

David Kilshaw, private clients services partner at EY, says this is win for non-doms.

He writes:

Until today, it looked like they would pay tax on the growth in those assets since they acquired them, even if that was 20 years ago. Hidden in the Budget documentation is a significant concession for these individuals in the form of “rebasing”. Effectively, this means they will only be taxed on the growth in value after 6 April 2017.

“Non-doms will want to understand the detail behind this relief, and quickly, so they know whether they should sell assets now or wait until April 2017 and potentially benefit from a tax free uplift for their foreign assets.”

Good news for non-doms!! </sarcasm>.

Small print: Osborne to miss welfare cap every year until 2020

The Welfare Cap has turned into something of a Heffalump trap for George Osborne.

According to the OBR today, the government is on track to miss its self-imposed limit to welfare spending every year until 2020.

This chart (from page 198 of the OBR’s outlook) shows that the government will breach the cap by £4.6bn in 2016-17, and in the next four years as well.

Welfare cap forecasts

Osborne announced the Cap in 2014, seemingly as a way of painting the opposition Labour party as profligate deficit deniers. But Labour signed up to the idea (rightly or wrongly), and Osborne promptly missed the target at the first time of asking.

The OBR explains that:

Since November we have revised up expected spending on a number of benefits, most notably disability benefits but also incapacity benefits, attendance allowance and carer’s allowance.

We have revised down spending on tax credits.

The welfare cap looked like a mean-spirited idea from the start (our own Owen Jones called it a “a gimmick, a political trap, using human lives as fodder”). And it’s also economically questionable - as a government needs the flexibility to raise welfare spending when needed.

Small print alert: Lifetime ISA could cost much more than expected.

The Treasury red book says that the new lifetime ISA, which will enable any adult under 40 to save up to £4,000 a year, with the government contributing £1 for every £4 they up in (ie, up to £1,000 a year), will cost up to £850m a year by the end of the decade. The money can be used to buy a house, or for a pension, or possibly for other “life events”.

But it could cost more, because the government does not really know. This document, Budget 2016 policy costings (pdf), ranks all the budget measures according to whether they will cost, or bring in, as much money as the Treasury assumes and this is the only spending commitment to get a “very high” uncertainty rating. Put bluntly, that means that the Treasury has not really got a clue how much it will cost. It could be much less than £850m, or much more. The Treasury explains:

The main source of uncertainty is the behavioural impact, because the cost of the top-up is extremely sensitive to it. In particular, assumptions are made about: the number of people choosing to use the lifetime ISA; how much they choose to save; and when they choose to withdraw. There is little information that can be used to inform these assumptions and the behaviour is dependent on a variety of other factors, which amplifies the uncertainty.

(There is no income cap on the policy, so there is nothing to stop wealthy parents giving £4,000 a year to their adult children - you have to be 18 to have a lifetime ISA - to get the £1,000 from the government.)

The £2bn squeeze on public sector pensions flagged up earlier is effectively a backdoor cut to public spending.

It will make it even harder for schools and hospitals to balance their books, says Jonathan Clifton, associate director for public services at the IPPR thinktank.

“The Chancellor has once again promised to protect the headline amount of funding that goes to schools and health - but he is loading more pressure onto these services via the back door. In a little noticed move he announced that an additional £2bn worth of savings will come from public sector pensions. These pension changes will fall on all public sector employers – including schools and hospitals - which are meant to be ‘protected’ from spending cuts.

Updated

Small print alert: Wine drinkers face higher duty

Cheers!

Accountants at Ernst & Young have flagged up that wine lovers are taking a hit, even though other alcohol duties were frozen today.

Charles Brayne, their Indirect Tax Lead, explains how they (like G&T drinkers) face paying more to the Treasury:

“The cost of the duty freeze on beer and spirits to the Treasury is estimated to be £425m over 5 years.

The giveaway could have been more generous had wine been included, as this accounts for 36% of all alcohol duties. For those of us that enjoy a glass of wine the duty paid will increase in line with inflation - by approximately 2% per annum - the cost per bottle will increase to £2.09 in 2016-17.

Small print alert: Business investment down

The Office for Budget Responsibility report (pdf) says that business investment fell at the end of last year and that it has revised down its forecast for business investment growth accordingly.

Real business investment fell in the final quarter of 2015. This gives a lower start to the current year and has therefore prompted a significant downward revision to annual business investment growth in 2016. At 2.6 per cent, it is 4.9 percentage points weaker than our November forecast. Business investment data are also prone to revision, so it is not clear how much should be read into the weakness of the latest data. It predates the bout of global market volatility since January and any additional uncertainty associated with the EU referendum campaigns.

The OBR also says there were “tentative signs” of uncertainty generated by the EU referendum affecting business investment, but that they were not enough to have an impact on its forecast.

There were only tentative signs of uncertainty regarding the EU referendum result affecting investment intentions by the time we closed this forecast and we have made no adjustment to reflect a change in behaviour.

The holes in today’s budget are painfully obvious, argues our economics editor Larry Elliott:

The chancellor announced reductions in corporation tax, North Sea taxation, business rates, froze fuel, beer and cider duties, increased the personal income tax allowance and raised the upper rate threshold. He will pay for them through yet another crack down on tax avoidance, tougher tax rules for multinationals and unspecified efficiency savings in Whitehall.

The giveaways are for real but the revenue raising measures may not be. Will HMRC really secure additional billions from tax avoidance? Will US-based tech giants actually pony up the tax Osborne is banking on?

The chancellor said repeatedly that he was delivering a budget for the long term, but it was nothing of the sort. It was a conjuror’s trick. And a not very good one at that.

Stuart Hosie, the SNP’s Treasury spokesman at Westminster, is implying that the Scottish government will not pass on George Osborne’s tax cut for higher rate taxpayers, the BBC reports.

Gavin Kelly, the Resolution Trust chief executive, says George Osborne has set a challenge for the Scottish government in his budget.

And he adds this.

Updated

Small print alert: Britain is less productive

Possibly the most worrying news today is that Britain is less productive than the experts hoped.

The Office for Budget Responsibility has revised down its assessment of Britain’s potential productivity growth -- the measure of how much British workers can produce per hour.

The OBR had hoped that this would rise as the impact of the financial crisis diminished, but it has now changed its view. Recent data showing a pick-up in productivity was “another false dawn”, it fears (in its executive summary)

UK productivity

This is a home-grown problem; not something that can simply be blamed on problems in the global economy.

And it means wages, company profits, consumer spending and business investment will all be lower - and ultimately, so will tax receipts.

Updated

Small print alert: Tax burden is going up

The Office for Budget Responsibility’s report (pdf) shows that the tax burden is going up. It is 36.3% of GDP in 2015-16, which Labour says this is higher than any time during the last Labour government and higher than any time since the mid-1980s. By 2019-20 it is due to hit 37.5%

Here's how Osborne gets his precious surplus

How has George Osborne managing to promise a surplus in 2019-20, despite the deteriorating growth outlook?

The Office for Budget Responsibility has crunched the numbers, and says it is based on unexplained future cuts, tweaks to corporation tax, and welfare spending.

The OBR says the government has:

  • cut its limit on departmental current spending by £2.3bn. That will be funded by a £700m cut in overseas aid and £3.5 billion of as-yet unidentified cuts to be generated by an ‘efficiency review’ that will report in 2018
  • The £2bn squeeze via public sector pension contributions
  • Dragging forward capital spending to 2017-18 and 2018-19
  • A net tax increase of £6.3 billion in 2019-20, mainly by giving large firms more time to prepare for quarterly corporation tax payments.
  • welfare spending cuts of £1.4 billion in 2019-20, largely through a further tightening of the disability benefits system.

And that means we’re looking at a pretty severe squeeze in 2019-20:

Public sector net borrowing changes

Two Tory MPs have been on Twitter complaining about the sugar tax.

These are from Will Quince.

And this is from Andrew Percy.

The Office for Budget Responsibility has worked out how the government is squeezing £2bn per year out of the public sector pension bill:

The Government has also placed an additional £2.0 billion a year squeeze on departments in that year by raising planned public service pension contributions, in line with a lower discount rate, but not compensating them for the additional costs they will face.

This reduces borrowing by displacing other departmental spending within existing expenditure limits, while reducing net spending on public service pensions;

Small print alert: New date for Lloyds share sale

The government has admitted that it could take another 12 months to finally sell the taxpayers’ stake in Lloyds Banking Group to the public.

On page 93 of the budget statement, the Treasury says:

The government will continue to return its financial assets to the private sector through launching a retail sale in 2016-17 and fully exiting its stake in Lloyds Banking Group and raising up to £25 billion from its stake in RBS over the course of this Parliament.

That retail sale (to small investors) was meant to take place this spring, but Osborne put it on hold in late January after global stock markets suffered heavy losses.

Lloyds shares are currently worth 69.1p, below the 73.6p which would allow the government to break even. So Osborne can’t sell them now anyway.

You can find all the budget documents on the Treasury website here.

Updated

Three of the many health organisations that have campaigned for a sugar tax welcomed the news, though stressed that other robust measures will also be needed to seriously tackle the obesity crisis.

Malcolm Clark, co-ordinator of the Children’s Food Campaign - an alliance of health, education and children’s organisations - hailed Osborne’s move as “a really important victory for children’s health”. He went on:

Not only will this tax on sugary drinks encourage people to shift towards healthier drinks, but it sends out a wider message about our need to cut down on sugar, and for businesses to reduce the sugar in their products.

Professor Graham McGregor, chairman of the campaign group Action on Sugar, welcomed the move as “excellent, outstanding”, but urged the chancellor to spend the proceeds on improving nutrition rather than boosting school sport.

The most effective way to tackle obesity is to reformulate products so we get levels of sugar and fat down, as we’ve done with salt. We would like to see a 50% reduction in added sugar and a 20% cut in fat over five years, though that may be a little unrealistic.

And Chris Askew, the chief executive of Diabetes UK, said:

It is really promising news that the government has announced a tax on the soft drinks industry. We have been campaigning for this measure as we are all consuming too much sugar. This is contributing to the huge rise we are seeing in the numbers of people who are overweight and obese, and therefore at increased risk of Type 2 diabetes.

Updated

A handy summary from the Office for Budget Responsibility, confirming that Osborne has only hit one of his three targets.

Impact of the budget on Generation Y

Perhaps even more than previous Osborne budgets, this one seem to be chock full of references to the “next generation”. I counted at least ten. He wasn’t, Osborne said, going to “let the next generation pick up the bill” or this was a “budget for the next generation”, or a budget that “puts the next generation first” or in case any of these weren’t clear Osborne added, “Doing the right thing for the next generation is what this government is about”. He ended with commending to the house, “a budget that puts the next generation first”.

So for all this plethora of intergenerational words, what was the upshot?

The biggest age related eye-opener was the announcement that Gen Y (or as he put it, anyone under 40) would be given a 25% top-up for up to £4,000 worth of savings in a new ISA scheme. This money could be used for pensions or a future deposit for a home. This might be one of the most generous announcements this chancellor has ever made for young adults.

Also - he’s lowering the discount rate! Yes that’s right. The discount rate! Confused? It’s basically the number that estimates how well off we’re going to be in the future. If we over-estimate then public employers can get away with paying less in to the pot because the future will expect to pay for it out of its vastly greater predicted riches. Now the rate is going down, employers will be forced to pay in more, meaning that pensions pots in the future will more likely to be better funded and their liabilities are less likely to hit future generations.

Osborne also announced he’s planning to introduce community housing trusts in the south west. There’s not much detail yet but any new housebuilding is good for millennials. Saying that, campaign group Generation Rent isn’t impressed.

Updated

Osborne appears to be easing the purse strings in the next two financial years, but then whipping away the pot of jam in 2019-20 to wipe out the deficit.

Small print alert: Infrastructure spending brought forward

That table at 2.18pm also shows that the government has brought forward £1.7bn of capital expenditure that was previously planned for 2019-20.

Why?

Because it helps cut spending in the 2019-20 financial year, creating a surplus, and allowing the government to meet the Fiscal Charter.

Budget policy decisions, page 86
Budget policy decisions, page 86 Photograph: HM Treasury

Updated

Jeremy Corbyn's response to the budget - Summary

Here are some of the main points from Jeremy Corbyn’s response to the budget.

  • Corbyn said the budget had “unfairness at its very core”.

This budget has unfairness at its very core, paid for by those who can least afford it. [Osborne] could not have made his priorities clearer - while half a million people with disabilities are losing over 1 billion in personal independence payments, corporation tax is being cut and billions being handed out in tax cuts to the very wealthy.

  • He said Labour supported the new sugar levy.

If we as a society cannot protect our children from high levels of sugar and all that goes with it with the later crisis of health, cancer and diabetes then as a House we have failed the nation.

  • He criticised George Osborne for offering “mates’ rates deals” to big corporations.

The gulf between what the Conservative government expects from the wealthiest and what it demands from ordinary British taxpayers could not be greater,” he said. The mates’ rates deals for big corporations on tax deals is something they will be forever remembered for.

  • He said 80% of public spending cuts had fallen on women.
  • He said that ministers had announced new homes in Ebbesfleet new town so many times they had built “12 homes per press release”. More press releases were needed, he joked.
  • He said there was “not one shred of evidence” that turning schools into academies boosts performance.
  • He criticised Osborne for failing to address deficits in the NHS.
  • He challenged Osorne to explain why he could not fund “the need for dignity of disabled people” if he cold find money for other measures.

I simply ask the chancellor this: If you can finance the giveaways that you have put in your Budget to different sectors, why can’t you fund the need for dignity for the disabled people of this country?

  • He described the budget as “the culmination of six years of failures.”

The budget the chancellor has just delivered is actually the culmination of six years of his failures. It’s a recovery built on sand on a budget of failure. He’s failed on the budget deficit, failed on debt, failed on investment, failed on productivity, failed on trade deficit, failed on the welfare cap, failed to tackle inequality in this country.

  • He questioned Osborne’s commitment to the north.

For all his talk of the Northern Powerhouse, the North East accounts for less than 1% of government’s infrastructure pipeline projects in construction. For all his rhetoric there’s been systematic under investment in the North.

Jeremy Corbyn
Jeremy Corbyn Photograph: PA

A good budget for oil companies and bookmakers

The City of London

Leading shares increased their gains by the end of the chancellor’s speech, with the FTSE 100 rising from 6144 at the start of his speech to 6171 - up 31 points on the day - by the time he sat down.
Oil companies were boosted by news of tax changes for the North Sea oil sector, with BP up 3.5%, Shell 3% higher, Tullow Oil adding 6%, Cairn Energy climbing 3.7% and oil services business Wood Group 4% higher.
News of the increase to ISA savings limits lifted investment groups Hargreaves Lansdown, St James’s Place and Brewin Dolphin.
Bookmakers were relieved there were no new measures announced that would dampen their business, given talk of changes in the racing levy. Ladbrokes is up 7% and William Hill up 4.7%.
But the sugar tax on drinks left Irn Bru maker AG Barr 4.7% lower and Britvic down 2.5%.

Small print alert: G&T drinkers in the firing line.

It’s not just squash-guzzling kids who are being targeted by the sugar tax....

Small print alert: Public sector pensions squeeze in 2019-20

The costs of the various policy decisions of the budget are out.

And they show that the chancellor is expecting to pull in around £2bn in 2019-20, and also in 2020-21, through changes to the ‘discount rate’ used to set some public sector pensions.

Page 84 of the Budget
Page 84 of the Budget Photograph: HM Treasury

That discount rate is used to set unfunded public service pension schemes, and is linked to future inflation and growth forecasts (explanation here).

So Osborne has found a way of squeezing £2bn out of the bill.

Updated

Jamie Oliver, the chef and a vigorous campaigner for a sugar tax, said the hancellor’s announcement that he will tax the soft drinks industry was “amazing news”. He posted on Instagram:

We did it guys !! We did it !!! A sugar levy on sugary sweetened drinks ... A profound move that will ripple around the world ... business cannot come between our kids health !! Our kids health comes first ... Bold, brave, logical and supported by all the right people ... now bring on the whole strategy soon to come ... Amazing news.

Jeremy Corbyn is responding to the budget now. He is delivering a decent speech, and getting a respectable hearing, although he has made little attempt to engage with the specific measures in the budget so far.

This is from the BBC’s Laura Kuenssberg.

We will post more from Corbyn’s speech later.

Political snap summary: More surprises than expected, and a distinct Thatcherite flavour

There was speculation about that being a boring budget, but in practice it was nothing of the kind. There were plenty of eye-catching announcements, although until we’ve had a chance to go through the numbers, it is hard to know how substantial any of these measures are. Recently the government has been playing down the prospects of a sugar tax, but Osborne has discovered his faith in interventionist, nanny state government with a levy that will be welcomed by public health specialists. The plans for lifetimes ISAs are at least a nod to the concerns of those in their 20s and 30s who cannot afford a house. But, overall, there was a strong Tory strain to these measures too. What he said about how his business rate reforms would help small businesses sounded like archetypal Thatcher (although she introduced business rates - but that’s another story) and, announcing his increase in the higher rate threshold, Osborne even evoked the memory of Nigel Lawson. He said it was the biggest cut of its kind since Lawson cut the top rate to 40p. That, of course, was a measure that helped the wealthy, and we’ll soon find out, from the red book, how regressive this budget is overall. Quite a lot, probably.

Updated

Economists are swiftly pointing to the problem with the new Lifetime ISA for under-40s - it’s no use if you’ve got NO spare money to invest.

Economic snap summary: Borrowing up by £34bn, growth down.

Despite Osborne’s best efforts to talk up today’s budget, the bottom line is that Britain’s economy looks rather weaker than at November’s autumn statement.

Growth has been cut every year between now and 2020. And the new forecast of 2% growth this year could prove optimistic, if the global economy worsens.

And that means borrowing is higher than hoped. Osborne rattled through the deficit figures - but by my maths, Britain is going to borrow more than £34bn more than expected between now and 2019.

A surplus is still on the horizon in 2019, but at the cost of £3.5bn of new spending cuts. And that ‘dangerous cocktail of risks’ on the horizon could still put that at risk.

Here’s the new deficit figures:

  • 2015-2016: £72.2bn, down from £73.5bn in the autumn statement
  • 2016-2017: £55.5bn, up from £49.9bn
  • 2017-2018: £38.8bn, up from £24.8bn
  • 2018-2019: £21.4bn, up from £4.6bn
  • 2019-2020: £10.4bn surplus, compared with a £10.1bn surplus
  • 2020-2021: £11bn surplus, compared with a £14.7bn surplus

The cut in corporation tax to just 17% is a surprise, and suggests Osborne wants to lure more multinational companies to the UK. That might cause angst in Washington, where companies will soon be paying twice as much (unless they shelter cash overseas).

Tax-wise, it was a relatively good budget for drivers who like a drop of whisky (not at the same time, guys). But the sugar tax will inevitably hit poorer families harder (like any flat tax).

The City’s verdict is in too. The pound has hit a two-week low, down one cent at $1.4060, as traders calculate that weak growth and higher borrowing = record low interest rates for a long time.

Updated

Osborne raises basic rate tax allowance and the higher rate threshold

Osborne turns to income tax.

  • The personal allowance to go up to £11,500 from April next year. This will give 31m people a tax cut, and means people are paying more than £1,000 less in income tax than in 2010, he says.
  • The higher rate threshold to rise to £45,000 from April next year. This will take people out of the higher rate who should never have been covered by it, he says.

And that’s it. The statement is over.

Under-40s to be allowed to open lifetime ISAs, with government contributing

Osborne turns to pensions.

He says his proposals on pensions were criticised by the Lib Dem former pensions minister, Steve Webb. He said Osborne was planning to abolish the lump sum.

Osborne says his reaction was to keep the lump sum, and abolish the Liberal Democats.

  • The ISA saving to go up next year from around £15,000 to £20,000.
  • Anyone under 40 will be able to open a lifetime ISA. For every £4 you save, the goverment will give you £1 until you are 50. The money can be used to save for a pension, or for a home. It will help people who cannot save for a pension. And the government will consult on whether to make it work like the US 401k schemes. And people will be able to roll their help-to-buy ISAs into these schemes.

Osborne says too many people in their 20s have no pensions or savings.

He wants to help, he says.

Osborne says he is going to abolish class 2 national insurance contributions for the self-employed.

  • Headline rate of capital gains tax cut from 28% to 20%.

Shares in some of Britain’s drinks companies are sliding, following news of Osborne’s new sugar tax :

Osborne turns to drink.

  • Beer duty and cider duty to be frozen.
  • Duty on whisky to be frozen.
  • Other alcohol duties to rise in line with inflation.

Fuel duty to be frozen

Osborne turns to petrol duty.

It was frozen in the last parliament, he says. That saved £7bn.

A fuel duty increase was pencilled in for this year. But he knows that it poses a cost to families, he says.

  • Fuel duty to be frozen for the sixth year in a row, Osborne says. He says this will save the averae driver £75.

Updated

Osborne announces a new £520m levy on sugary drinks

Osborne turns to child health.

A child age five eats their body weight in sugar every year, he says.

He says some manufacturers are addressing this. Industry can act and, with the right incentives, it will.

He says is is not prepared to do nothing.

  • A sugar tax to be introduced on the drinks industry. It will be introduced in two years time, so they have time to change. There will be two bands. Pure fruit juices to be excluded.

The government will consult on this, he says.

He says manufacturers can choose if they want to pass the price onto consumers.

  • Sugar levy to raise £520m.
  • Money to be used to double the amount of money spent on sports in schools. And schools will be able to apply for money to extend the school day, with more sports activities. One quarter of schools will get help. But that is just the start, Osborne says.

A drive to improve schools in the north will be launched

Osborne turns to education.

Investing in schooling is the most important thing a government can do, he says.

  • Osborne confirms that English schools will be “freed” from local authority control, and turned into an academy.

He says London schools have been turned around. A new plan will focus on turning around schools in the north.

  • A drive to improve schools in the north will be launched.
  • All pupils up to 18 may have to learn maths.
  • A fairer schools funding formula will be introduced, Osborne says.

Osborne says an education white paper will be published tomorrow with more details.

Osborne announces £20m for cathedral repairs. And there is another joke.

Because there is one thing that is pretty clear these days - the Conservative party is a broad church.

Updated

MPs listen to chancellor George Osborne deliver his budget statement.
MPs listen to chancellor George Osborne deliver his budget statement. Photograph: Video grab/PA

Osborne announces an extra £700m for resilience and flood defences

Osborne turns to flooding.

  • Osborne announces an extra £700m for resilience and flood defences.

He is also accepting the infrastructure commission’s recommendations on energy and London too.

And he jokes that Jeremy Corbyn will welcome the Crossrail 2 announcement. It is aimed at those like him who are “living in north London and heading south”.

Osborne praises Andrew Adonis for his work as chair of the National Infrastructure Commission, and he confirms plans to go ahead with HS3.

Osborne announces an initiative to tackle homelessness.

Osborne says the new stamp duty rules will come into force in April. Large investors will be covered, he says.

Osborne says he wants to speed up planning, and prepare Britain for G5 technology.

Osborne says the Greater London Authority will move towards the full retention of business rates from next April - three years earlier than planned.

Greater Manchester to get new powers over criminal justice

Osborne turns to devolution.

  • Greater Manchester to get new powers over criminal justice.
  • English counties to get elected mayor. East Anglia to get an elected mayor, as will the West of England and Greater Lincolnshire.

Osborne says an air ambulance service will be created for Northern Ireland.

Osborne says a new city deal has been signed for the Cardiff region.

  • From 2018 the price of the tolls on the Severn crossings to be halved.

Taxes cut for North Sea oil industry

Osborne announces tax cuts for the oil and gas industry.

  • Petroleum revenue tax to be effectively abolished.

He says this is only affordable because Scotland is in the UK.

If it had voted to go independent in nine days time (the original plan, if there had been a Yes vote in September 2014), Scotland would face an economic crisis, he says.

Commercial stamp duty to cut for small firms

Osborne announces a reform to stamp duty.

  • Small firms to benefit from a commercial stamp duty reform. Some 90% will pay less, or be unaffected, although 9% of firms will pay more.

Updated

Osborne turns to reforms of business rates.

  • 600,000 small businesses to be taken out of business rates. This could save them £6,000 a year, he says.
  • 250,000 firms will pay less in business rates, Osborne says.
  • Osborne says half of all properties will pay no or less business rates under his plans.

Osborne says many firms feel the face unfair competition from internet suppliers. Some of them do not pay VAT. The government will stop that.

  • Government to close a VAT loophole used by overseas internet merchandisers.

Osborne also announces a tax allowance for people who make money from activities like renting out a room. (The Airbnb allowance?)

Corporation tax to be cut to 17%

Osborne says his budget last year delivered measures to improve producivity.

First, he turns to measures to reform business taxes.

Britain has one of the most competitive business tax regimes.

Today he is publishing a roadmap to make business taxation fit for the future.

His approach is guided by best practice advice from the OECD.

Some multinationals borrow here and then offset the payments against tax.

Osborne says he will cap interest deductibility at 30%.

He says there will be changes to hybrid mis-matching rules.

Tax payment dates will be aligned more closely to when profits are earned.

The result will be to create a more modern tax system.

  • Tax reforms will raise £9bn from large firms, Osborne says.

Osborne says the money will be used to help other firms.

  • Corporation tax to be cut to 17%.

The new debt/GDP forecasts mean that George Osborne has missed his target of starting to cut the national debt, as a percentage of output, this financial year. That now won’t happen until 2017-2018:

Osborne says in cash terms the national debt is lower than it was forecast to be. But so is the nominal size of the economy.

So debt as a percentage of the GDP is higher. But it is lower in cash terms.

  • Debt forecast to be 82.6% of GDP next year, followed by 81.3% in 2017/18, then 79.9% in 2018/19, then 77.2% in 2019/20 and 74.7% in 2020/21.

Osborne says the deficit was 11.1% when he took office.

  • Deficit forecast to be 2.9% next year, followed by 1.9% in 2017/18 and 1% in 2018/19.

Osborne says he wants to keep public pensions sustainable.

The changes in the last parliament saved £400bn in the long-run, he says.

  • Public sector employer pension contributions to rise, Osborne says.

UK growth downgraded

The Office for Budget Responsibility has made some significant downgrades to its growth forecasts for every year until 2020.

Here are the new forecasts, compared to the ones just four months ago:

  • 2016: 2.0%, down from 2.4% in November’s autumn statement
  • 2017: 2.2%, down from 2.5%
  • 2018: 2.1%, down from 2.4%
  • 2019: 2.1%, down from 2.3%
  • 2020: 2.1%, down from 2.3%

That is going to hit the amount of money Osborne can expect to take in tax:

Osborne says the government is announcing changes to the disability budget.

But spending on disability is rising, and is higher than under Labour, he says.

Inflation in 2016 will be just 0.7%, says Osborne, down from 1% expected in November.

George Osborne delivers his eighth budget in the House of Commons.
George Osborne delivers his eighth budget in the House of Commons. Photograph: PA

Spending due to hit 36.9% of GDP by end of the decade

Osborne says the government was spending 45% of GDP in 2010. In the last parliament the government got that down to 40%.

  • Spending due to hit 36.9% of GDP by end of the decade - the same as what the government raises through taxation, Osborne says.

The inflation target for 2017 has been revised down to 1.7%, from 1.8%.

Updated

Osborne says he has written to the Bank of England, confirming that the central bank should continue to target an inflation rate of 2%.

He has also asked them to be ‘particularly vigilant’ about market turmoil.

Osborne says, when the economy is growing, Labour says the government can afford to spend more. And when it is not growing Labour says it needs to spend more.

He says he is today publishing a report showing that, if spending had not been cut, the government would have spent £930bn more by the end of the decade.

Osborne says he is writing to the Bank of England saying its inflation target is still 2%.

Osborne turns to the forecast for the labour market.

More jobs have been created than the OBR expected.

Today’s figures show employment at the highest level ever. And the claimant count is at its lowest since November 1974.

Labour said in the last parliament 1m jobs would be lost. But 2m were created.

Labour said the jobs would be low-skilled. But 90% are skilled.

And they are not just in London, he says.

OBR says leaving the EU would lead to “disruptive uncertainty”, Osborne says

Osborne says the OBR is making is forecasts on the assumption that the UK will vote to stay in the EU.

And he reads from the OBR report saying that a vote to leave would result in a period of “disruptive uncertainty”.

  • OBR says leaving the EU would lead to “disruptive uncertainty”, Osborne says.

Growth forecasts

Osborne turns to growth.

  • OBR says growth was 2.2% last year, will be 2% this year, then 2.2% in 2017, 2.1% in 2018, 2019 and 2020.

Osborne says eight years ago Britain was the worst-prepared of the major economies for the challenges it faced.

Now it is one of the best.

When he became chancellor, the government was borrowing £1 for every £4 it spent. Now it is £1 for every £14.

Osborne says he fixes his plans to fit the figures, not the other way around (as Labour did, he implies.)

OBR has revised down potential UK productivity growth, Osborne says

Osborne turns to the forecasts.

  • OBR has revised down forecasts for global growth.

Monetary policy has been loosened around the world, he says. The Bank of Japan has joined others in introducing latest to introduce negative interest rates.

  • OBR has revised down potential UK productivity growth, Osborne says.

He says the OBR describe this as “a highly uncertain judgment call”.

He turns to the economic forecasts.

Today he is accepting the recommendations of the report into the Office for Budget Responsibility, he says.

And he praises Sir Nick Macpherson, who is standing down as Treasury permanent secretary.

Osborne says the best way to help working people is to help them save and to let them keep more of the money they earn.

Osborne says the outlook for the global economy is weak. It makes for a cocktail of risk.

He says Britain knows what happens if you assume you have abolished boom and bust.

He will put stability first, he says.

Britain can choose short-term fixes and more stimulus, or long-term solutions.

He chooses “sound public finances to deliver security”, as Conservatives always should.

Government on course to achieve a budget surplus, Osborne says

George Osborne rises to a big cheer.

Today he reports on an economy set to grow faster than any other major economy in the world, he says.

He says employment is at an all-time high.

  • Government on course to achieve a budget surplus, Osborne says.

PMQs is over. Lindsay Hoyle, the deputy speaker, is taking the chair.

Caroline Lucas, the Green MP, asks about the budget plan to make all schools in England academies. This is counter to the government’s commitment to devolution, she argues.

Cameron says this is true devolution. The government is putting all headteachers in charge of their schools.

Frances Osborne, the chancellor’s wife and author, has come to support her husband:

Cameron and Corbyn at PMQs

(I prepared this while the system was down.)

Cameron says employment is at a new record high. There are 2,370,000 more people in work than when he became prime minister.

Jeremy Corbyn asks Cameron how many people will die from respiratory disease before Britain meets its air quality targets for 2025.

Cameron says he does not have those figures, but he says the government is acting on air pollution.

Corbyn says half a million people will die. How much does air pollution cost the economy?

Cameron says of course it costs the economy. The government’s carbon reduction plan would give the government one of the best green records.

Corbyn says the Royal College of Physicians says air pollution costs the economy £20bn a year. There was a smog alert in London recently. Why won’t the government act?

Cameron says it was Conservative governments in the 1950s that acted on this, and a Conservative government can act again.

Corbyn says we all welcome the 1956 Clean Air Act, but things have moved on. Why not spend money on investing in better air?

Cameron says the government is. It is phasing out coal-fired power stations. But you can only act if you have a strong economy.

Corbyn says, if the government is so keen on clean energy, why did it block a move to allow communities a veto on clean energy. Will it offer communities a veto on fracking?

Cameron says the government has planning law. Some 99% of solar panels were installed since he was prime minister. He criticises Corbyn for not asking about the unemployment figures. They are supposed to be the party of labour.

Corbyn says Cameron once boasted about leading the greenest government ever. No husky was safe from his cuddles. Why is the government failing people who work in the green energy industry.

Cameron says the government has a good record on green energy. He lists some achievements in this area. On renewable electricity, the government is on track to get 30% of renewables by 2020.

PMQs – Snap verdict

Corbyn’s best PMQs yet? He was indignant, punchy and focused, and also, at least once, genuinely funny. Cameron did not seem to be expecting this line of attack, and Corbyn had him under pressure relentlessly in all six questions. A piece needs to be written about how he was transformed. And of course it was sartorial too. The beige suit seems to have gone, and Corbyn actually looked smart. Cameron’s mum would approve. Cameron himself will be less pleased about it all ...

Updated

Any listacle of the world’s worst jobs could probably include responding to the Budget speech.

Giving an instant reaction and critique to the nation’s tax and spending plans is a truly daunting task. And today, that falls to Jeremy Corbyn....

Sorry the blog has been off air for almost an hour. Our system crashed. But we seem to be back in action now.

Updated

It is George Osborne’s eighth budget. But, if you take into account autumn statements and spending reviews, it is his 16th big economic statement to the Commons since 2010, according to the tax campaigner Richard Murphy.

And, according to Number 10, George Osborne told the cabinet it would be a budget for the next generation, suggesting he could try to address criticism the Tory leadership has neglected the needs of the young while wooing older and better off voters.

(Perhaps he’s been reading the Guardian series about millennials.)

However, Osborne also repeated warnings that economic storm clouds are gathering, hinting at a cautious budget with not a lot of leeway for big giveaways.

Cameron says budget is 'pro-enterprise, pro-infrastructure, pro-devolution'

According to Number 10, this is what David Cameron told the cabinet about the budget.

This is a pro-enterprise, pro-infrastructure, pro-devolution budget that fully sums up what this government is all about - transformation.

David Cameron leaving Number 10 this morning
David Cameron leaving Number 10 this morning Photograph: Justin Tallis/AFP/Getty Images

George Osborne has just emerged from Downing Street and is being driven the short distance to the Houses of Parliament.

He posed for the traditional Red Box photo, with the Treasury team:

George Osborne posing with the Budget box

The bookmakers reckon we’ll hear the word ‘tax’ a lot today.

Sporting Index predict George Osborne will utter the T-word 95 times during his speech. That’s almost twice a minute.

They also expect a rowdy affair, with deputy speaker Lindsay Hoyle expected to interrupt the speech three times, to demand MPs behave themselves.

Here are their odds (available online here):

Place your bets....

Updated

Here are two more budget stories from today’s papers.

Plans to reduce capital gains tax have been examined by Treasury officials as ministers look at ways to encourage people to sell their second homes.

George Osborne has suggested that he is keen to cut the tax after the Liberal Democrats forced him to raise it during coalition negotiations in 2010.

Officials have been asked to look at cuts to the top rate from 28 per cent to 20 per cent, while the charge for basic rate taxpayers would drop from 18 per cent to 15 per cent.

HM Revenue and Customs is understood to have assessed the cost of the changes. A Treasury spokesman refused to comment on whether the chancellor would go ahead with the measures in this or future budgets, though reform during the parliament is likely.

The Department for Work and Pensions have created a GIF showing how the UK labour force has risen over the last six years:

Updated

Daniel Finkelstein, a Conservative peer, argues in his Times column today (paywall) that expecting the leader of the opposition to respond instantly and in detail to the announcements in the budget is daft. He has some advice for Jeremy Corbyn.

Faced with this challenge, Jeremy Corbyn should use his favourite technique. He shouldn’t even bother. He should say that he will reply to the budget once he has studied it. Instead, he should outline the fundamental critique of Conservative economic policy that Labour is now moving towards.

The Labour MP Lindsay Hoyle has a copy of the budget statement.

Why? Because he is deputy speaker, and he takes the chair during budget statements. There is a video here explaining why.

(I’ve been covering these things for a while, but I never knew the deputy speaker got a copy this far in advance. Perhaps he’s got Jeremy Corbyn banging on his door now asking to take a peak.)

Gabriel Sterne of Oxford Economics suggests the chancellor is missing a trick by not taking advantage of today’s cheap borrowing costs (echoing Pimco’s Mike Avey earlier today)

Back in 2010, the UK was paying around 3.6% per year to borrow for a decade. Today, it costs just 1.5% per year.

That suggests that investors would happily buy more UK sovereign debt (as interest rates rise when demand for government debt falls). And that money could be used for infrastructure projects, and growth-friendly measures that the “next generation” would benefit from.

Updated

Another reason to raise fuel duty:

There’s a calm mood in the City ahead of the budget, with the FTSE 100 index basically flat.

Alastair McCaig, market analyst at IG, reckons Osborne could turn to the so-called “sin taxes” to shore up the finances.

Expectations are high; the usual suspects of cigarettes and alcohol will come under the microscope, along with the much delayed increase in fuel charges.

The government’s policy is to raise fuel duty by inflation, or by inflation plus 1% when oil price are low (defined as below $75 per barrel). Brent crude is changing hands around $40 per barrel this morning, so a hike could be on the cards.

A fuel duty would be unpopular with motorists, though. Sky’s Faisal Islam reckons it’s “now or never”....

The ONS has also released figures today on public sector employment.

As Sky’s economics editor Ed Conway points out, there is a chart in the report that illustrates how austerity has hit local government much more than central government.

And Wales has been particularly badly hit.

And John McDonnell, the shadow chancellor, has tweeted a short video about Osborne’s budget too.

Today’s employment report also shows the impact of austerity on local councils:

George Osborne has tweeted about his budget.

The cabinet met this morning to be briefed by George Osborne on the budget.

The Telegraph’s Harry Yorke was outside Number 10 as ministers came out afterwards.

Today’s unemployment report also shows the impact of George Osborne’s squeeze on public sector jobs:

UK unemployment report

The latest UK unemployment report has just been released (online here)

It shows that Britain’s jobless rate remains at a ten-year low of 5.1% in the three months to January, while the employment rate is a joint record-high of 74.1%.

There are now 31.42 million people in work, which means 116,000 people found work during the last quarter.

And the claimant count (the number of people receiving unemployment benefit), fell by 18,000 in February to 717,000. That’s the lowest level since April 1975, when the Bay City Rollers were topping the charts.

Wage growth has also picked up a little, according to the Office for National Statistics. UK earnings, including bonuses, rose by 2.1% year on year. That’s slightly better than expected, following a worrying slowdown in recent months:

Updated

McDonnell says budget seems to be 'taking us back to the old politics of spin and little substance'

John McDonnell, the shadow chancellor, has said he expects the budget to go back to “the old politics of spin and little substance”. He said:

This budget looks more like a press stunt to hide George Osborne’s failures than about any serious policy.

Take his education announcement, it won’t address the real issue in our education system around increasing class sizes, shortage of teachers and lack of school places by just forcing schools to become academies.

With only one in four schools getting any additional money for the extra hour he’s adding to the school day, we will see schools competing with each other for funding and parents will see their aspirations constrained.

There’s further uncertainty of funding when it comes to the infrastructure projects that the chancellor is set to reannounce. Only one in five projects in his infrastructure pipeline is under construction.

And when you put all this together with the possible tax cuts that are floated, which will be paid for by more stealth taxes and cruel cuts to the disabled, this Budget from George Osborne looks to not be about the future, but taking us back to the old politics of spin and little substance.

McDonnell will not be responding to the budget statement. By convention, that is a job for the leader of the opposition, so Jeremy Corbyn will have to respond. It is one of the hardest tasks for the opposition leader because he or she has to respond to a speech packed with detail without getting any advance notice of the proposals.

John McDonnell
John McDonnell Photograph: Philip Toscano/PA

Updated

The Resolution Foundation’s Torsten Bell has coined a good budget aphorism.

Some historical context, from Royal Bank of Scotland:

We’ve pulled together the important data you need to know ahead of today’s budget:

It includes this chart, showing how UK government spending has been slashed faster than average since the 2008 financial crisis.

Government spending

Updated

Bond trader: Osborne could borrow more

A top executive at the world’s largest government bond trader has urged George Osborne to borrow more money from the financial markets, rather than imposing fresh cuts.

Mike Amey of Pimco, told Radio 5 Live’s Wake Up To Money programme that the government could simply tap international investors (such as Pimco) to make up for any shortfall in today’s budget, rather than imposing more austerity.

In Amey’s view, fresh cuts aren’t necessary, given Britain’s budget deficit has already halved since the financial crisis. Indeed, they could be self-defeating.

And as the UK can borrow at record low levels right now, there is room for more spending.

He says:

The pressure on the government to keep relentlessly cutting the deficit is lower.

The economy is under a bit of pressure, so there is an argument with very low interest rates for some infrastructure spending, and doing it now rather than promising to do it in the future.

More spending, though, would risk breaching the chancellor’s new Fiscal Charter, which mandates a surplus by 2020.

Updated

As the Guardian reported overnight, one of the key proposals in the budget will involve making all schools in England academies and trying to extend the school day.

Conor Ryan, who worked as a special adviser focusing on education when Tony Blair was prime minister, points out that there is nothing new about government wanting to stop the school day ending at 3.30pm.

Today’s budget speech could be quite gloomy.

We’re expecting George Osborne to warn that “storm clouds are gathering again” over the UK economy, which means the government will “act now so we don’t pay later”.

The chancellor used the ‘storm clouds’ line back in February, during the G20 finance minister’s meeting in Shanghai (as China’s slowing economy was causing some alarm in the financial markets).

Here is a video from our colleague Helen Pidd showing what the people of Teeside think of George Osborne’s Northern Powerhouse idea, and what they would like to see in the budget.

What the people of Teeside want from the budget

George Osborne, the chancellor, is delivering his eighth budget today and, according to the BBC’s Ross Hawkins, he seems to have been up early getting ready.

The budget is always the most important event in the chancellor’s year, and often it’s the single biggest life-shifting statement from the government in any parliamentary session, but there has been speculation that this one will be, as the Financial Times put it at the weekend, a bit “boring”. The EU referendum means that Osborne is under pressure to “play it safe”, and he has already shelved plans for sweeping pensions reform. Also, he does not have the money for a spending spree. Or, as the FT puts in one of the more arcane headlines of the year, he is constrained by “fiscal claustrophobia”.

Still, in our book there is no such thing as a boring budget, and my colleague Graeme Wearden and I will be giving full coverage here all day. We will be covering the run-up, reporting the statement in full, and then focusing on reaction and analysis, with a particular focus on what’s in the small print.

Here is the Guardian’s budget preview story.

And here is Larry Elliott’s analysis.

Here are the timings for the day.

12pm: PMQs

12.30pm: Budget statement.

2.45pm: The Office for Budget Responsibility holds a budget briefing.

If you want to follow us on Twitter, I’m on @AndrewSparrow and Graeme is on @graemewearden.

Updated

Economic preview

Rules are made to be broken, according to US general Douglas MacArthur. But George Osborne is only likely to partially follow that advice today.

Economists are confident that the chancellor will miss his goal of cutting Britain’s national debt, as a percentage of national output, in the 2015-16 financial year.

That’s because the UK economy is £18bn smaller than previously thought. Economic problems abroad and disappointing wage growth and tax receipts at home, mean growth is slowing and the public finances are looking weaker.

Missing that fiscal rule would be embarrassing for Osborne, given his enthusiasm for tighter fiscal discipline. And critics will surely take it as evidence that his fabled “long-term economic plan” hasn’t delivered the goods.

However, Osborne is also expected to stick to his new Fiscal Charter, which demands a balanced budget by 2019-2020. He’s already hinted that this means £4bn in fresh austerity measures, to keep the goal of a surplus in four year’s time.

Those cuts are likely to be scheduled later in this parliament, to avoid antagonising the electorate ahead of June’s referendum. That would also allow Osborne (or his successor) to reverse them if the economy picks up.

Once Osborne has given his speech, the Office of Budget Responsibility will deliver its verdict on the budget and the UK economy. They are likely to downgrade their growth and borrowing forecasts, given recent weaker economic data and disappointing earnings growth.

However, back in November the OBR surprised us all by producing a surprise £27bn windfall for the chancellor to play with, so you never know….

Updated

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