The economic news was grim, with the growth forecast halved for 2013, bigger deficits in the years ahead and a further delay in meeting the Treasury's target for cutting the national debt as a proportion of GDP. The only comfort for the chancellor was that the independent Office for Budget Responsibility believes Britain will escape a triple-dip recession by posting an increase in activity in the first three months of 2013. But the OBR's forecasting record is poor and it will probably be a close run thing.
The budget itself will neither boost the economy nor suck demand out of it, so the Treasury will not be doing anything itself to rescue Britain from its slowest economic recovery in 100 years. That job will be left to the Bank of England, and one of the more significant sections of the speech detailed the changes to the job description for Mark Carney, Threadneedle Street's governor-elect. Put simply, the Bank will be expected to signal to the financial markets that it is going to provide a monetary stimulus to the economy for a very long time. Carney will provide "guidance" to the markets to make sure the message gets across loud and clear.
Osborne's changes are likely, therefore, to have a bigger political than economic impact. Many of the measures – the duty cuts for beer drinkers and motorists – were blatantly populist, while the help to buy scheme for the moribund housing market was a throwback to Margaret Thatcher's right to buy scheme of the early 1980s. There is something ironic in a government that came to power intent on rebalancing the economy towards investment and exports should now be relying on that old warhorse – the housing market – to revive growth.
These headline grabbing measures, together with the announcement of a £10,000 personal allowance, the reduction in corporation tax and the cut in national insurance contributions gave the impression that this was a giveaway budget when it was in fact neutral. Indeed, once pre-announced changes to benefits and tax credit are taken into account, most people are going to be worse off this year than they were last.
In the end, the fact that living standards are being squeezed more intensely than at any time since the 1970s may be what sinks the government. The chancellor's political calculus seems to be that the wretched state of the economy is now taken as given and that voters might want to be cheered up a bit. After three years in which growth has been weaker and borrowing higher than he envisaged, Osborne had precious little to work with. But he gave it his best shot.
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