The Liberal Democrat challenges for 2012: The Budget

To mark the start of 2012, I’m running a series of posts over consecutive days on the main challenges for the Liberal Democrats in 2012. I’ve already written about the four priorities for the party’s new Chief Executive, Tim Gordon, but as the Liberal Democrats are more than just the one man whilst he has four, this series sets out six for the party.

Political pundits rarely get their predictions right. It isn’t that they are particularly bad at punditry, it is just that – as research has shown across several fields – experts generally have a pretty poor predictive record. One prediction, however, that is rather safer than leaving your chocolate in my safe-keeping is that the economy will continue to be the dominant political issue.

In 2012 at least there is a good reason for such uncertainty with the great uncertainty over the European and US economies, both of which can have large impacts on our own. Some of the news from the US and parts of Europe is starting to looking cautiously promising, and the world’s economy outside the developed world has also been showing promising signs, including – thankfully – in many of the world’s poorest countries. On the other hand, a Euro-meltdown could make those factors look positively trivial.

Even in the best of scenarios, the 2012 Budget will not be one where the government has money to spare. That makes the choices of priorities all the more important. Even without a net reduction in taxation, it is possible to make the tax system fairer or greener.

The wealthy can be taxed more and the struggling the least. If there is some sort of fiscal boost for the economy it can be done in ways that initially favour different sections – such as the low paid or the married. And so on.

On many of these issues it is not as simple as a Conservative versus Liberal Democrat split. They often see Conservative modernisers agreeing with Liberal Democrats and in opposition to traditional Conservative backbenchers. That means it is possible to see a distinctively Liberal Democrat influence on the Budget. It will be a key test of what the party achieves from being in coalition during 2012.

You can read the full set of challenges here.