According to the Chancellor, all that matters about the Budget is that he meets his fiscal rule.

For reasons that no one is aware of and which no one, including the City, cares about, he thinks that his fiscal rule must require that he reduce the scale of the national debt - because that has been the story with which the Tories have been beating Labout for well over a decade.

Everything in yesterday's budget was, in that case, designed to meet this goal, and according to his own data, he does meet it:

That downward line in the middle of the fan to the right is all he cares about.

There is a cost to this. If the government borrows less, someone else has to borrow more: that's the way in which any economy works if new money (all of which is debt-based) is to be created, which is the actual rule that cannot be broken because, unlike so-called fiscal rules, it is based on facts. So this is the sectoral forecast which shows who might be net saving and borrowing over the next few years:

Households are going to borrow more, by saving less. That's the price of the government demanding more in tax to reduce its debt.

The overseas sector is still going to save in sterling.

And business is going to apparently start borrowing quite a lot, presumably because there is going to be a heavy investment to fund the growth that all politicians think is just around the corner, but probably is not.

Is that likely? Yes, with regard to reduced household saving. Income taxes are going to rise much faster than GDP growth, as I showed yesterday:

That cut in household savings is likely in that case. People can't both save and pay more tax when already pushed to their limits.

But will business invest heavily using borrowed funds so that the government might borrow less? I really do not think it is likely.

My reasons are that the GDP forecasts look like this:

GDP per head grows well for one reason: it is assumed that immigration falls, dramatically:

When someone says a behaviour pattern will change radically, they have to give a good reason: there is none here. The reality is that migration is going to increase rapidly in this world as a result of climate change: that's the fact, and the above chart is not.

In that case, this chart on nominal and real earnings growth looks to be fanciful:

Rea; earnings growth of less than 1% is incredibly low and does not inspire business confidence or stimulate considerable investment. If GDP growth is actually going to be much more population-based than the OBR suggests, then even that growth is in doubt.

Can I, in that case, see the fall in debt that Hunt predicts? I can't, I admit.

But I can still see the tax explosion.

Labour really does need to say how they are going to deal with all of this because the state of the government's books is now known. I am not, however, expecting to hear much at all. If you think the credit card is maxed out and everything spending commitment has to be covered by tax, as Labour apparently does, there is little wriggle room here. Sometime, Labour is going to have to do some real macroeconomics and talk about debt financing. But I will not be holding my breath in anticipation.

I have spent much of this afternoon, a) talking to journalists and b) trying to work out how the Budget adds up.

The first task was relatively easy. The second was less so.

In part, the great cost saving in the Budget is on interest: it has been assumed that the cost of government borrowing will fall quite quickly to 3% rather than the 4% assumed last November. That finds £10 billion.

But, that was not enough, so I went on a hunt for the rest that explained how Hunt was going to give tax away. I finally got to Table A5 of the Annex to the Office for Budget Responsibility's Economic and Fiscal Outlook publication that supports the Budget data, and there I smelt a rat.

I prepared the following chart by noting n0minal GDP  from table A3 of that annex for 2022-23 to 2028-29 and then noting data from table A5 on income tax, national insurance, VAT and corporation tax over the same years.

Then I calculated GDP and tax receipts for each year as a ratio of the 2022-23 figure to show growth in them, and then plotted this to get this chart:

The two blue lines in the centre that almost match each other are GAP growth and VAT, which unsurprisingly match each other almost exactly.

National insurance declines markedly: Hunt is pretending that he really will get rid of this tax.

But then note what happens with both income tax and corporation tax: both rise at rates well over anything that can be justified by the growth in GDP.

Corporation tax is a small tax; silly forecasts can be made for it, and this one is absurd: profitability is not going to grow at that rate.

But, income tax is what really matters. The forecast increase is utterly disproportionate. The growth in tax owing each year is at a rate almost double the rate in the growth of GDP.

To put this in context, income tax shown to be due in 2028/29 is £48 billion more than it would be if it grew at the rate of GDP growth.

In other words, the actual rates of income tax increase we will all actually be suffering because of fiscal drag over the next few years are going to be very high indeed - and that is how Hunt is supposedly balancing its books.

In that case, the real question to ask is, what is Labour going to do about this? We have a tax time bomb waiting to explode in the UK. Are they going to let it go off?

The Office for Budget Responsibility published this in March 2023, but the data has not moved that much since then:

There will be much talk today about the tax burden in the UK. It is worth reminding ourselves that compared to similar countries, it is low, and we demand services of the scale that they enjoy. Unsurprisingly, the impossibility of achieving that outcome is now becoming apparent.

We have a choice. We can go for lower state services and pay for our medical care privately, which is how the US delivers its outcome - whilst leaving large parts of the population at massive risk of not getting the care they need - or we can pay via taxation for the services we need to live in a decent society where everyone has a chance.

To be selfish or not, that is the question.

I will be headed to the BBC’s Broadcasting House in London during the course of this morning. As has been the case for well over a decade now, I will be listening to the budget whilst there (and tweeting about it almost continually, for those who use that platform) before going on air at about 1:30 pm to discuss what Jeremy Hunt has had to say with Jeremy Vine.

There will be one change to the regular format of this Radio 2 programme on this occasion. Mark Littlewood, formally the director of the Institute of Economic Affairs, and the architect of much of Liz Truss’s economics, is no longer my sparring partner. The unfortunate news is that the BBC are replacing him with Julian Jessup, formally of the Institute of Economic Affairs. I suspect that I will treat any nonsense that he has to say with the same disdain that I showed to Mark over the years that we commented together.

If reports are to be believed, and the Treasury appears to have become ever more leaky in this respect over the years, two of the biggest announcements that might be made in this budget are already known.

The first is that fuel duties are to be frozen, yet again, at a cost of more than £5 billion a year. Given that this has been frozen for so long, no one should be particularly surprised about this, but the implications are large. The only way in which the Office for Budget Responsibility could make last November’s forecasts for the next five years meet the requirements of Jeremy Hunt’s so-called fiscal rule was by assuming that this charge would be reinstated. If that is not to be the case, then how he will supposedly balance his books, using that false criteria of appraisal with which he is much enamoured, is not known. Unfortunately, I see none of the detailed figures before going on air, so I doubt that I will be able to provide elucidation during that commentary.

The second decision that he is being reported as having made is that national insurance is to be cut again. 2% was cut off the employee’s rate last November. It is claimed the another 2% will be cut off this rate in the Budget to be announced today. Clearly we do not know if this is true as yet, but if it is then the cost will be between £9 billion and £10 billion per year, with a supposed average saving of a little over £400 a year for the mythical average earner.

Presuming that this leak is based on well informed Treasury sources, then this move makes almost no sense.

Politically the Conservatives got no discernible political gain from the last cut that they announced, even though they rushed through legislation so that the impact was seen in pay from January 2024 onwards. As a result, it is very obvious that this cut answered no question that any reasonable person might have asked about the government’s intentions with regard to the supply of sound economic policy, and nor will another one.

This is unsurprising. At least three quarters of people in the UK would rather have any government action in this Budget focused upon improvements in the supply of government services, from the NHS onwards. No one is going to thank Jeremy Hunt, Rishi Sunak, or any other Tory MP, for getting this judgement wrong, again.

Then there is one other issue to consider, which is that this policy change fails to have any impact at all on the one group in society where the Tories are hoping to retain support, which is amongst pensioners. Many pensioners are now being forced to work because of increasing pensioner poverty, but since no one over the age of 66 pays national insurance, this will have precisely no impact on their well-being. As targeted measures go, this one completely fails.

There will, of course, be some other announcement that Jeremy Hunt will make to provide a headline if these two have been so heavily trailed, but however looked at these measures, that promote pollution in one case and deny the public the services that they need in the other case whilst collectively failing to deliver for the Tory voter base, really are disastrous. If these are the best that Jeremy Hunt can come up with, I think we can already fairly suggest that this Budget will not deliver for him or his party any of the gains that they so desperately seek. Jeremy Hunt might have been better advised to spend the £100,000 of his own money that he has invested in his own re-election campaign elsewhere in that case.