What to watch out for from the new government

I sense that the blue/yellow plan is to communicate a sense of “government of national unity”.

The sight of Cameron and Clegg patting each other on the back in blue and yellow ties were vivid totems of that. The sight later today of George Osborne and Vince Cable on the steps of the Treasury will be, as incredible.

This is a hugely important day for economic policy. Mervyn King is outlining his quarterly inflation report, and what I expect will be a warning about the daunting fiscal challenge facing this novel political marriage.

Already, some economists feel that some of the fiscal space that could have been used for faster deficit reduction appears instead to have been used on concessions to glue the coalition together. For example, George Osborne is going to try to enact at least part of the LibDem policy on raising the income tax threshold.

Here’s what to watch out for today –

1. National insurance rise, aka “Labour’s jobs tax which will crush the recovery”, will only be half-reversed
2. Abandonment of inheritance tax cut, semi-abandonment of recognising marriage
3. Capital gains tax increases
4. Bank tax, and inquiry into breaking banks up
5. Health spending un-ringfenced?
6. Establishment of Sir Alan Budd’s interim Office of Budget Responsibility
7. Emergency Budget

And I eagerly await Nick Clegg’s explanation for indulging in what he called the “economic masochism of merrily cutting now” which he promised not to support in government on 13 March.