The Budget, due on 20 March, is just around the corner now and as we approach the halfway point in the current Parliament, the government’s strategy of combining austerity with recovery is having at best mixed results.  Together with colleagues from tax and our public sector practice, I’ve posted some thoughts on KPMG’s budget website.  We’ll be updating this as the budget approaches and on the day so do check back for further analysis and reaction.

• Andrew Smith’s Economic look ahead for the Budget 

By Andrew Smith, chief economist, KPMG in the UK

2012 proved disappointing for most advanced economies as unemployment remained stubbornly high and output wavered between expansion and contraction. Any improvement in 2013 will depend as much on political considerations as economic fundamentals.

By Andrew Smith, Chief Economist, KPMG in the UK

The government’s strategy is to combine deficit reduction with economic recovery, but at the moment we are not getting much of either. The Chancellor confirmed that output is undershooting and government borrowing overshooting even the March Budget’s modest expectations. Growth forecasts have been downgraded, the austerity programme extended to 2018 and the debt rule is a dead duck. Just because this was broadly as expected doesn’t mean it’s not bad news.

By Andrew Smith, Chief Economist
Economists are not having much luck at forecasting the economy – can we do any better with the Olympics?

By Kru Desai, KPMG’s head of Local Government
The six city deals announced last week are one of the first really visible manifestations of the government’s commitment to giving regions responsibility for their own achievements. They are an important transfer of power, putting city regions in the driving seat when it comes to securing economic growth.

By Andrew Smith, Chief Economist

Just a few years ago a eurozone breakup seemed inconceivable but ‘no bailout, no default, no exit’ no longer applies. After two bailouts and a debt restructuring, policymakers are openly discussing a Greek exit from the euro and financial markets are attempting to price it in. The UK may not be in the euro club, but that rather misses the point: we would not be immune from the fallout. For while the direct economic effects of a default and euro exit by a small country such as Greece would be limited, it is impossible to predict the ramifications of the ensuing financial disruption, which could be extremely severe.

By Fiona McDermott, Partner for KPMG’s Business Modelling Group

The majority of business leaders in Europe and the UK now think that one or more Eurozone countries will default on its sovereign debt this year, according to research by KPMG. Many UK businesses are debating whether the Eurozone crisis could be another Y2K and what the real impact on businesses profitability and cash flow might be. But only a minority of businesses are currently making contingency plans for such an event, according to our research. My view is this is not a theoretical debate; the market is already changing and creating a different business environment.

By Vincent Neate, Head of Sustainability at KPMG in the UK

We were delighted to welcome Deputy Prime Minister Nick Clegg to KPMG’s offices yesterday where he launched his ‘green growth’ initiative.  There were several really interesting aspects to the speech that caught my attention.

By Alan Downey, head of KPMG’s UK public sector practice

The government’s open services white paper update is very welcome, as it sends a signal that the government is committed to stepping up the pace of public sector reform. 

By Andrew Smith, Chief Economist

The price of oil has hit a new high in sterling terms and, where oil goes, petrol follows. In recent days pump prices have touched record levels – piling more pressure onto already stretched households. The economic recovery has been weak so far – will rising oil prices derail it completely?