Fudged.

A budget, and politics beyond the sweet spot.

The Budget has turned out to be a bit of a fudge. Rachel Reeves has dodged both of the hard decisions she faced. With the option of raising taxes and cutting spending, she has done a little bit of both, but not enough to really change the trajectory of this government. The threshold freezes will irritate people, but will not raise cash as much or as fairly as rate increases. The difficult decisions on public spending have been kicked down the road until the fag end of this Parliament – when politics means they are unlikely to be taken.

Britain is likely to stay on the same course as it charted in the latter years of the Conservative government: historically high taxes, combined with struggling public services. It is a situation that arises because of politicians and our discourse remaining mired in an air of unreality – disregarding demographic trends and the challenge of continued low growth. On the left and right, parties fail to accept the extent of the change and hanker after the politics of the past. The problem is that these relied on something we no longer have: the demographic sweet spot.

The sweet spot is a phenomenon that has shaped much of our recent history. Put simply, as birth rates and life expectancies change with the advent of modernity, the sweet spot sees you with a large cohort of workers and few dependents, as a group that had high fertility and shorter lives is replaced by one with better health and fewer children. This gives you a good shot at sustained growth for decades. Until it doesn’t.