Osborne takes lead role in panto season

We are entering the season of pantomime and circus. For several years past we have been treated to classic performances in the annual Chancellor’s Autumn Statement from a pair of pantomime dames, Gordon Brown and Alistair Darling.

In last year’s show George Osborne played the role of the leading boy, come to save us. This year’s opens on Tuesday. Is it all going to end happily ever after or will Osborne be clown, a magician or an expert juggler?

Osborne has to be seen to be stimulating the economy without suggesting that he is piling up extra debt. So difficult is that task that it calls for a supreme high-wire artist.

The figures are too well-known (and dire) to rehearse yet again and no doubt we will be treated to the usual rivalry (“Oh yes you did!” “Oh no we didn’t!”).

Intentional belly laughs will be in short supply, but can we, the poor audience who pay for this annual extravaganza, expect any sweets to be thrown to the front rows?

As always, expectations are being managed while lobby groups press their cases for special treatment. But this year there is a real surprise: many of those in the front rows are already saying they don’t want a present.

Surveys of major businesses show that some 75% don’t want the chancellor to tinker with the rate of VAT.

At the margin, they claim, a small adjustment does not do much to demand and it is costly to administer, especially as trade is distorted around the date of the change.

The 2.5 percentage point temporary cut in 2009 did not boost sales significantly. Many say that if Osborne were to make a token cut, they would resist cutting prices and use the proceeds to boost wafer-thin margins.

Rather, they say, raise tax and benefit thresholds for lower income groups, the people who spend any extra income from necessity. That would at least put the money in the tills.

Most retailers believe that 2012 will be a dire year, anyhow. Consumers are battening down the hatches and real spending is probably going to fall by about 2% by the end of 2012.

Capital Economics, the respected forecasting house, predicts that after falling by 2% and 0.5% in 2012 and 2013 respectively, real spending (ie after inflation) on alcohol and tobacco will be flat in 2014. Not until 2015 will there be a modest upturn.

But a cut in excise duties (except on petrol) is about as likely as one of the Ugly Sisters landing Prince Charming. Given the Treasury’s record, even hoping for a halt to the “escalator” introduced by Darling would seem wildly optimistic.

Osborne has to keep the audience interested, so there will be some smoke and mirrors. But the best “review” would be that this year’s show was boringly dull because nothing much had happened. A flurry of “Hey Prestos” is likely to leave us more disappointed in the long run.