The IFS Green Budget: February 2011

Published on 2 February 2011

As Chancellor George Osborne prepares for his keynote statement on fiscal policy and the economy the IFS Green Budget assesses some of the issues he will have to deal with.

The Green Budget 2011 was edited by Mike Brewer, Carl Emmerson and Helen Miller, and copy-edited by Judith Payne.

It was produced in collaboration with Barclays Capital and Barclays Wealth and with additional funding from the ESRC-funded Centre for the Microeconomic Analysis of Public Policy at IFS.

SUMMARY

Chapter 1: CHECKING OUT THE SUPPLY SIDE OF THE ECONOMY

1.1 Introduction
1.2 Recent estimates of 'supply'
1.3 Using survey data to gauge 'supply'
1.4 How we expect potential GDP to evolve
1.5 Are output gaps actually useful?
1.6 Conclusion

Chapter 2: THE NEW FISCAL FRAMEWORK: AN ASSESSMENT

2.1 Introduction
2.2 Borrowing and debt through the crisis
2.3 The new borrowing target
2.4 The new debt profile target
2.5 The Office for Budget Responsibility
2.6 Conclusion

Chapter 3: FISCAL VULNERABILITY: A STOCKTAKE

3.1 Introduction
3.2 Financial markets and the public finances
3.3 Measuring fiscal vulnerability
3.4 Risks
3.5 Conclusion

Chapter 4: THE ECONOMIC OUTLOOK

4.1 Introduction
4.2 Demand drivers
4.3 Inflation prospects
4.4 Conclusion

Chapter 5: GREEN BUDGET PUBLIC FINANCE FORECASTS

5.1 Introduction
5.2 Errors in forecasting borrowing for 2009-10
5.3 Baseline forecasts
5.4 Alternative macroeconomic assumptions
5.5 The Budget judgement

Chapter 6: PUBLIC SPENDING CUTS: PAIN SHARED?

6.1 Introduction
6.2 Trends in UK public spending
6.3 Spending Review 2010
6.4 Did previous spending cuts go to plan?
6.5 The system for planning public spending
6.6 Conclusion

Chapter 7: PUBLIC SECTOR PAY AND PENSIONS

7.1 Introduction
7.2 The total public sector pay bill
7.3 Public sector earnings
7.4 Public sector employment
7.5 Public sector pensions
7.6 Conclusion

Chapter 8: MEASURING THE DISTRIBUTIONAL IMPACT OF PUBLIC SERVICE CUTS

8.1 Introduction
8.2 Can we measure the distributional impact of spending on public services?
8.3 What can existing studies tell us about the distributional impact of planned cuts
8.4 Conclusion

Chapter 9: DEFINING A TAX STRATEGY

9.1 Introduction
9.2 The need for a tax strategy
9.3 The elements of a strategy
9.4 The prize
9.5 The policymaking process
9.6 Conclusion

Chapter 10: CORPORATE TAXES AND INTELLECTUAL PROPERTY

10.1 Introduction
10.2 Issues in designing corporate taxes
10.3 UK corporate income taxes
10.4 The taxation of innovation and the Patent Box
10.5 How to tax offshore intellectual property
10.6 Conclusion

Chapter 11: ENVIRONMENTAL POLICY

11.1 Introduction
11.2 Environmental targets
11.3 Fiscal policy and the environment
11.4 Environmental policy reforms: enacted, planned and potential
11.5 Consistency of carbon prices
11.6 Conclusion

Chapter 12: THE IMPACT OF TAX AND BENEFIT CHANGES TO BE IMPLEMENTED IN APRIL 2011

12.1 Introduction
12.2 Tax and benefit changes due in April 2011
12.3 The distributional impact of the tax and benefit changes due in April 2011
12.4 The impact on work incentives
12.5 Conclusion

APPENDICES

Appendix A: Forecasting public finances
Appendix B: Calculating implicit carbon taxes
Appendix C: Headline tax and benefit rates and thresholds
Appendix D: Abbreviations