There is nothing sacrosanct about having a budget surplus if it means slower growth in the economy. This holds true as long as markets are prepared to lend to you at reasonable rates, and in the case of the UK they are.
Interest rates at which we borrow have hardly moved. Indeed the cost to the Exchequer of servicing the debt is similar to what it was in 2008 despite the debt trebling over that period.
Why is this relevant? Because according to the latest ONS data for government finances, George Osborne’s target of a budget surplus on current spending was achieved in 2017/8, albeit two years later than originally planned. The small £112m surplus is the first in 16 years. The data also show better tax receipts and more people in employment than earlier predictions had suggested. Stealth taxes and overpaying in many areas such as inheritance tax seem to have all helped. But the overall deficit was still some 2 per cent of GDP.
George Osborne as Chancellor was defined by the austerity he presided over after the financial crisis. But in the process much was done to unbalance the economy which has been left in a permanent weaker state. Spending cuts in real terms across most sectors took their toll on service provision. Business investment has been slow to recover since the initial drop from the crisis. And although the sharp reduction in public sector jobs has been more than made up by higher private sector employment, many of the new jobs over the period have been low paid, part time, self-employed and relatively low productivity, with the result that real wages have taken a decade to get back to where they were before the crisis.