Citywire: Darling’s christmas present conceals a debt trap, says New Star’s Simon Ward

Alistair Darling’s emergency budget is pregnant with dangers. His package will not achieve his objectives of shortening the recession and hastening recovery while the borrowing the UK will have to undertake will impose major costs on future taxpayers, endangering the long-term health of the economy. On the face of it, Darling is delivering a significant economic stimulus in 2009-10 through his temporary VAT cut and other measures. The Treasury reckons cyclically-adjusted net borrowing will rise by 1.9 percentage points of gross domestic product (GDP), the largest increase since 1992-93. This package will contribute to record headline borrowing of £118 billion in 2009-10 or 8% of GDP.