The last few weeks have seen the Chancellor go back around the doom loop. Learning nothing from budget 2024, once again she has allowed or encouraged stories to run of all kinds of tax rises to come. This is a killing activity.
Many households have reined in spending, fearing the worst. Businesses have delayed or cancelled investment in anticipation of another government cash grab. Last budget, the jobs tax brought rising unemployment, and the small business and farm taxes brought less growth. The economy stalled last quarter.
Chancellors used to go into budget purdah for weeks before the event. The idea was not to disturb markets with rumours and leaks about planned tax changes, as these lead people to rearrange their affairs to avoid taxes to come.
It was especially important not to hint at a tax-raising budget, as this is bad for growth and jobs, putting people and companies off spending. People will fear a bigger attack on their finances than may happen, and stop spending earlier.
These days, we have Downing Street leading the budget speculation. The strong hints of an Income tax rate rise were called rolling the pitch, preparing the public for Labour breaking its Manifesto promise. Now we are told they rolled the wrong pitch and do not intend an Income tax rate rise after all.
It does seem likely they will extend the freeze on income tax thresholds, pushing more and more people into the higher rate band to bring in substantial extra income tax revenue. Apparently, they think this is not breaking the promise, but it will be an income tax rise for all experiencing it.
The most absurd thing about the government's wild swings and briefings is that we are told they are all related to the Office of Budget Responsibility's five-year forecasts.
The Chancellor foolishly chose a fiscal rule which says she needs to control the amount she has to borrow in five years' time, based on the OBR forecast of how much that will be.
On one OBR guess, she needed an income tax rate rise, and on a slightly later one, she has now seen she does not.
This volatility in a five-year forecast, which is almost bound to be wrong, is forcing damaging changes to taxes based on a change of assumptions or on different data on volatile things like interest rates.
It's a crazy way to run a budget.
The truth is, the government is overspending and borrowing too much now. A prudent budget for a stable and growing economy would rein in spending next year and avoid all further tax rises.
No one can accurately forecast the borrowing and deficit in five years' time, as interest rates, growth rates, and exchange rates may vary a lot before we get there.
The Chancellor has bought into an absurd delusion about the future that risks taking ours away - John Redwood | Getty Images
There are easy targets for lower spending that will not harm the main public services or UK prosperity. End the huge losses by the Bank of England needlessly selling bonds.
Stop so many illegal migrants from coming. Help more people into work off benefits. Stop the giveaway of the Chagos and the money to Mauritius. Do not give money to the EU. Trim the subsidies and public capital to carbon capture and storage.
Markets will lower government borrowing costs if the Chancellor cuts next year's borrowing by better spending control.
Markets will keep rates high if the Chancellor tries to delay controlling borrowing until later and decides to do it by raising taxes.
More tax means slow growth or no growth, which means a bigger deficit. Find enough spending reductions to allow some tax cuts to boost investment and spending power, and then you could have a growth loop to replace the doom loop we are spiralling into.
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