With tomorrow’s Budget looming, the Chancellor is not short of advice on what to include. George Osborne has been under pressure, in part from his own backbenches, to look again at the strategy he’s been determined to pursue despite the longest period of economic stagnation for a hundred years.
Many organisations would like him to pull back on plans for yet more cuts in public spending and instead to come up with measures that would create jobs. 
Take the STUC for example. In its latest Labour Market Report, it points out that the economic strategy adopted by the Coalition Government has condemned the UK economy to a prolonged period of economic stagnation and mass unemployment. With youth unemployment stubbornly high, it adds, and long-term unemployment and economic inactivity rising, it is clear that the mistakes of recessions past have already been repeated.
It has led Grahame Smith (above), STUC General Secretary, to stress that he thought it “essential that in his Budget announcement tomorrow, the Chancellor introduces measures to boost jobs and growth. The STUC’s latest labour market report shows that the median wage in Scotland has fallen in real terms by £27 a week or £1410 a year. Therefore measures which boost disposable income such as a VAT cut together with a programme of deficit funded capital investment is the minimum required to get the economy moving.”
“Our labour market report also highlights the UK’s appallingly low level of investment in active labour market measures. If unemployed people are not to suffer the erosion of skills and confidence associated with prolonged periods of unemployment then investment in credible, work based programmes must be enhanced.
The trouble is that the government in London has shown little sign of wanting to change its economic course. 
Like it or not, Mr Osborne has little “wriggle room” so there will be little in the kitty for any headline-grabbing measures. Indeed, some publications point out that there is so little cash in the Chancellor’s coffers that they’re warning of dire future consequences of Greek or Cypriot proportions.
Money Week, for instance, has been warning for some time about the escalating size of the UK’s deficit. It’s pointed out that, far from being a slash and burn administration, the present Coalition could actually be on course to increase borrowing in its five year term by more than the previous Labour Government did in its ten years in office.
It’s also worth recalling that the recent Green Budget from the Institute for Fiscal Studies (IFS) indicated that public spending in the UK will be £64bn higher by the end of this Parliament than previously hoped. Much of the increase will come from a massive rise in the cost of social security – up by 4% of all public spending – and that despite all the constant talk of benefit cuts.
Tomorrow however, we’ll have a different set of calculations to work with – those from the independent Office for Budget Responsibility (OBR) which will publish its estimates of how much the government borrowed in the current financial and how much it expects to borrow in the future. In the past, the government was able to state that, from 2009 to 2012, it succeeded in cutting borrowing by nearly 25%. But many forecasters, not just the IFS, believe that trend will be reversed.
The problem is that parts of the economy have not performed well in the past year – much worse than the Chancellor had expected. Growth has been persistently weak; the country has only managed to grow by 0.7% since George Osborne took over as chancellor – much less that either he or the OBR had forecast. There are even questions being asked about whether the UK’s about to dip back into recession. To add to the chancellor’s woes, he also received less money from the auction of the 4G mobile phone services than he hoped. As a result, he may be forced to confirm the analysts’ fears about rising borrowing and risk damage to the government’s political credibility.
Publications like Money Week have also been warning about the outbreak over what they call ‘currency wars’ – 
in other words, governments vying with each other to devalue. While it may help the government to pay off some of its international debt, the cost will be rising inflation and the pound in your pocket steadily losing its purchasing power.
That said, those business owners who tread the networking circuit may well have heard calls from speakers to “turn of the TV news and stop buying newspapers”. They point out that, while there are undoubtedly some firms struggling to cope in the current market conditions, there are many more that are thriving. As the Caledonian Mercury has reported, there are Scots companies in the Top 100 which are producing double-digit growth and healthy profits.
In an article on the BBC’s webite, Business Editor Robert Peston argued that, if you took financial services and oil out of the economic 
equation – both of which are in serious decline, “the rest of the economy is in better shape than many might believe, if not in the rudest of health.” He drew on the Treasury’s own figures for this conclusion.
Scotland of course has been heavily dependent on both financial services and energy and suffered as a result. However, some news from the North Sea is positive enough. The Bank of Scotland’s Business Monitor and the CBI’s industrial trends surveys have both shown signs of optimism.
As usual, there have been some leaks about what the Chancellor may say. For instance, he’s expected to announce more spending cuts worth about £2.5bn – the Scottish Government will have find 1% savings a year over the next two years in its own spending plans as a result. However, against this Mr Osborne wants to use any money saved in this way to pay for large-scale infrastructure projects which should help boost economic growth.