By request, some thoughts on today's Budget.

The three big headline issues are the tax increase, the debt and the forecasts. On the first point, I don't disagree with various commentators who point out this is mainly a political move - the revenues raised will contribute only a portion of those needed to tighten the fiscal position. However, it will (and has) created headlines, and shifts the focus towards a different economic debate - one which Labour must be gambling will appeal to the public and push the Tories into either a weak non-position or an unpopular one. Anti-rich (or at least, anti-rich-bankers) sentiments are prevalent at the moment. We could, of course debate for hours on the merits of redistributive tax policy (actually, I'd get bored in ten minutes), so let's leave that aside.

I heard the Budget, especially the tax rise, described as smoke and mirrors, and to the extent that it appears to be a more significant policy for revenue raising than it actually is, this is valid. That said, overall, I'm not sure it's an entirely fair assessment - the government has taken a number of important counter-cyclical positions since last Summer. They are criticised for not doing enough and for doing too much.

That brings us to the second issue - that national debt will increase to nearly 80% of GDP - raises a number of worrying possibilities. Spain recently had its credit rating dropped on the basis that its debt would rise to 70% of GDP with counter-cyclical fiscal policies. Britain has a stronger economy than Spain, but even so such a high level of debt could cause agencies to regrade Britain's AAA rating, as more borrowing increases the possibility of default. Clearly, that possibility would remain low. But a slight increase in that possibility is enough to increase the cost of borrowing, and impose and even greater burden on future tax revenues.

How much is too much? There isn't one answer to this - providing it can be serviced, and provided the market is willing to provide the finance, then the large numbers may be scarier than they actually are. Of course, last month an auction failed to place 100% of new gilts, though this doesn't necessarily indicate that investors are running out of demand for government debt.

My biggest issue is the continual conflation of the issues of private and public debt by the Opposition. Excessive private borrowing has and will continue to cause problems during this recession - it should have been better regulated in the past and should be curbed in future. Public debt is a result of a government's fiscal position, so it is entirely right that it increases during a recession, as tax revenues fall and government spending increases. It, in itself, isn't reckless - the flip-side is that debt should be paid back during good times, which would have prevented such staggering public debt figures today. However you may judge the borrowing for public service investment after 2001 (and with the benefit of hindsight, it is safe to say that the government could have done more to reduce borrowing when the economy was booming), their action now is fundamentally correct.

Which doesn't stop the Tories scoring points on misinformation. They keep mentioning reckless borrowing referring to both public debt and private debt, and that will resonate. It is a lot more complicated to explain to the public that excessive household borrowing is bad, while huge government borrowing is OK (they could link to this blog post, but that probably isn't going to do it)

Finally, the forecasts need to be mentioned. The general consensus is that Darling's predictions lie at the upper end of forecast distribution, even after revising downwards his November predictions, and I have no reason to disagree with the consensus. He needs to be right. Otherwise, borrowing will end up exceeding what has been predicted, and the deficits won't be reduced is anything like the timeframe indicated. Most importantly, the predicted growth is the engine that quietly reduces defecits and borrowing requirements while the 50% tax policy will take the political credit. The question is really can the government afford to revise forecasts downward again - are they myopic enough that the short term gain of playing down the real size of the recession exceeds the long term blow to their already weak credibility. They might, if an election comes in between the realisation of the former and the latter.

Final thought: I wonder if they realised that the car scrapping proposal would open themselves up to Cameron's best line?