Don't Panic

The verdict on Sir Alan Budd's report is mostly gloomy.I can't help thinking that the report is actually quite optimistic.

The deficit falls faster on Sir Alan's calculations, as everyone has reported.

Growth is lower than the old Treasury forecast, but actually still very good. Sir Alan predicts that, after this year, growth will be above trend for the next four years.

There is some good news on public sector pensions too. Tucked away on page 59 of the report is a table on the impact on spending of an aging population. It shows that in 2009-10 public sector pensions cost 1.8% of GDP. That rises to 1.9% in 2019-20 and 2029-30, then falls back to 1.8% in 2039 and 1.7% in 2049-50. So the hysteria over public pensions is unnecessary.

The cover of the OBR report should have the words "Don't Panic" written in large friendly letters.