Austerity is over - but there is no splurge

You are going to hate this. Sorry. But today's budget is both the end of austerity and not quite the end of austerity.

The chancellor said goodbye and good riddance to eight continuous years of public spending cuts with projections to increase government expenditure by 1.2% a year after adjusting for inflation - what are known as "real" increases - for five years.

So in 2023-4 total "managed" spending will be more than £140 billion a year higher than it is today.

That is consistent with Hammond and May's narrative that the lean years are coming to an end.

In fairness to them it represents a massive shift from the amazing shrinking state we've seen since 2010, even though around 80% of the expansion relates to the health service.

This giveaway also represents a de facto dumping of the ambition of the previous chancellor to balance the books by 2025 - because as the official forecaster, the Office for Budget Responsibility, says, Hammond made a choice with his combination of spending increases and tax cuts NOT to hit that target.

To quote the OBR: "Had there been no fiscal loosening in the Budget, the objective [of generating a public sector surplus] would have been achieved in 2023-24" - but now still looks a "challenging" objective.

So has cautious, careful, scrimping Phil become splurging Phil?

Errrr no.

What Hammond has done is spend a significant windfall that came his way from the OBR's assessment that the economy is a bit bigger and is generating a bit more revenue from taxes than it thought likely only a few months ago.

But - and this matters - even with the economy growing at a lacklustre 1.5% a year as far as the eye can see, the state continues to shrink relative to the UK's national income.

This year total managed public expenditure is forecast to be 38.2% of GDP or national income. It is set to shrink to 37.9% of GDP over the coming five years.

This is not a massive contraction. But it shows that the services delivered by the state should be protected but not significantly expanded.

Shadow Chancellor John McDonnell reacts to a joke made by Hammond during his Budget speech. Credit: PA

In that sense, there remains a very significant gap between the public-sector ambitions of the Tories and those of Corbyn's Labour.

All that said, the OBR also did its best to render absurd pretty much everything that was forecast and promised today, when it said that there is "no meaningful basis on which to predict" the outcome of Brexit negotiations and that a "disorderly" Brexit would have "severe short-term implications for the economy".

The Chancellor tried very hard to accentuate the positive - that he could spend considerably more every year if the PM gets the sort of Brexit deal she wants.

But it is striking that the OBR revealed that it had expected "a slightly larger fiscal giveaway than the government eventually decided on" and that there had been a very last minute change to the policy package.

That implies May and Downing Street wanted a bigger giveaway and that the Chancellor and Treasury cautioned that would be reckless, pending the settlement of our Brexit future.

Theresa May listens to her Chancellor deliver his budget speech. Credit: PA

By the way, the accelerated increase in personal tax allowances - for zero-tax and top rate - has a smell of planning (insurance) for a possible Brexit-crisis snap election. Absolutely no reason in normal electoral cycle to pledge those cuts now.