But it is in amongst the weeds of the UK's budget projections that the full horror of Britain's fiscal situation presents itself.
Having wildly optimistic estimates that don't go anywhere near standing up to any kind of real-world scrutiny is nothing new these days - one only has to look at the forecast curves for the US deficit of the US Congressional Budget Office to witness an exercise in the triumph of hope over experience, but the UK's own 'austerity' program - so loudly praised by those responsible for selling it - appears to be almost devoid of cuts altogether. In assembling any such projection, those responsible are fortunate to have two sides of the ledger to play with and, if everybody is focusing on the level of spending cuts required, it is often safe to assume that nobody is looking at the revenue projections and so that is where one can find the more ... 'optimistic' numbers. That fact has been curiously missed by many commentators who have fallen for the siren song of the coalition, amongst them Bloomberg's very own Clive Crook:
To help restore financial confidence, the government would tighten fiscal policy at once. The idea was that austerity, done correctly, would promote growth. It would remove the threat of fiscal collapse. With public borrowing in check and confidence improved, the private sector would take up the slack.
It didn't happen. Britain's households aren't spending, and its businesses, despite running big financial surpluses, aren't investing. For the past 18 months output has been essentially flat, still well below its level when the recession began. Official forecasters think output won't regain its 2008 level until 2014 -- a slower pace of recovery than Britain experienced after the Great Depression.
In one way, the figures flatter the Tories' fiscal experiment, because the Bank of England has been more forceful than the Federal Reserve in supporting the economy with quantitative easing (where the central bank buys debt to increase the money supply). The Bank of England persisted in this approach despite high inflation, which peaked at more than 5 percent last year, against the Bank's official target of 2 percent. Without such aggressive loosening of monetary policy, the economy would be in even worse trouble.
Together, though, monetary and fiscal policy are still doing too little to support demand. Inflation has fallen in recent months and, according to the Bank, is on track to drop below the 2 percent target. Some of last year's inflation surge was due to an increase in value added tax, which will drop out of the numbers. Expectations of inflation have stayed well under control -- a tribute to the Bank's ability to explain itself -- and, crucially, with unemployment still very high, there's no sign of wage inflation.
The Bank can do more QE if need be, but looser fiscal policy can and should be part of the mix. Unfortunately, the government is unlikely to admit its mistake and concede that fiscal policy has been too tight...
A looser fiscal policy than the one that has seen borrowing surge since it was implemented and that contains spending INCREASES in each of the next 5 years may NOT be such a good idea if looking for austerity, but to reveal the full horror of the UK government's basis for their projections, we return to Greg Weldon, who has by no means been fooled for one second (these next paragraphs are definitely NOT for the fiscally faint of heart):
Not only are there NO spending cuts within the UK Budget projections for the next five years, annually through the year 2017 "¦
"¦ UK government spending will increase, every year, including an expansion of +2.8% scheduled to be implemented this year.
The UK government is 'banking on' growth in Revenue that will exceed the rate of growth in Expenditures, including growth of +3.5% cooked-into-the-books for this year.
But, the margin for error is slim, with year-over-year Revenue forecast to grow by more than the growth in year-over-year Spending, by a mere £1.4 billion.
Over the next five years things get even more interesting.
In order to 'support' a sizable EXPANSION in SPENDING over the next five years (pegged at +12.7%), the UK Treasury is RELYING on an astronomical rise in Revenue over that same five year period, pegged at +33.4%.
Revenue is forecast to rise by +£184.2 billion over the next five years, or by nearly +£40 billion per year.
Ahem, excuse me "¦ perhaps the UK Treasury overlooked the FACT that Revenue in February, pegged at £38.631 billion was (-) 1.9% BELOW the year-ago February revenue of £39.381 billion.
A decline of nearly £1 billion is FAR from the projections calling for a near +£40 billion per year increase over the next five years.