The Budget on 8th July will be all about providing the details of the second stage of austerity and hopes have been building that Mr Osborne will smooth the profile of the spending cuts. But the Chancellor has clear political incentives to get austerity well out of the way before the 2020 election and his room for manoeuvre has also been limited by the Conservatives’ manifesto pledges, which include eliminating the structural current budget deficit by 2017/18. So the big picture will still be that the economy faces a significant drag from fiscal policy.
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