What to watch out for in ‘hangover budget’

“Building Britain’s Future” is the title of today’s budget, but it will be a document mired in the past. The figures released at lunchtime will make the wrong sort of long-term history, marking public debts and deficits never before seen in peacetime.

But really this is a budget about recent history, about the calamitous carnage wrought by the credit crunch on Britain’s public finances. It could be called the hangover budget.

Firstly, despite the wobbles of the IMF, we will get the first indication of the direct bill for the bailout of our banking system. Not the £200bn IMF estimate, now withdrawn, more like £50-60bn. But an incredible admission nonetheless.

Since November’s PBR the UK government has signed its biggest contract since lend-lease in 1941. That was signed with the US to help fight a war. The point about today’s numbers is that they will show a fiscal impact on Britain in keeping with a major war.

So the “prudent provision” for losses on bank support is the first number I will be looking for. It may well be the largest single measure in any budget.

Secondly, watch out for another cut to the planned growth in total public spending. The PBR pencilled in real-terms growth of 1.1 per cent per year between 2011 and 2016. If the spin on efficiency savings is right, that number will fall well below 1 per cent.

That means a lower average growth in public spending planned by a likely outgoing Labour government than the average of the Thatcher era between 1979 and 1990.

And I’ll also be looking out for one of Gordon Brown’s favourite measures of public finance failure. When he was Chancellor he often boasted that whereas he devoted 17p in the pound of extra public spending to the “costs of economic failure” – that’s debt interest and social security, the Conservatives had averaged 42 pence. I strongly suspect that this budget will see those costs exceed the 42p milestone.

Stand back from it and will we get a reshaped business plan for UK plc? Or is this a government that can only hope to jump-start the City, and get house prices up?