As widely expected, this year's Budget was a macroeconomic non-event. Chancellor Gordon Brown got the bad news out of the way in the revisions he made to his forecasts in December's Pre-Budget Report. The Treasury stuck to its PBR forecast for GDP growth of 2-2(1/2)2% in 2006 and 2(3/4)-3(1/4)% in 2007, and changes to the fiscal projections were small by past standards. With his growth and borrowing projections now back on track, the Chancellor had no need to raise taxes over-and-above the raid he announced on oil companies in the PBR. But neither did he have scope for any giveaways. So, while there was the usual array of measures and yet more tinkering with the tax system, the bottom line was broadly neutral: a net fiscal relaxation of just £380 million in 2006-07 and a net fiscal tightening of £415 million in 2007-08 and £705 million in 2008-09. Current borrowing during 2005-06 at £10.8 billion was close to the PBR forecast, and with hardly any net discretionary policy changes, revisions to the Treasury's overall projections for the public finances were relatively small - although, of course, not compared to the forecasts published in the March 2005 Budget.
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