With no fiscal room for manoeuvre, the Chancellor nevertheless managed to deliver a major reform of savings along with other headline-grabbing measures that will please his political supporters.

The changes to pensions and ISAs should enhance long-term economic performance by encouraging saving and promoting a more productive allocation of capital, partly by reducing “structural” flows into long-term gilts as annuity rules are relaxed.

The time-limited doubling of the business investment allowance, on the other hand, is a tinkering measure designed to give a boost to capital spending and the wider economy ahead of the 2015 election, with payback from 2016.

A further rise in the personal allowance, cuts in alcohol and air passenger duties, the higher investment allowance and energy reliefs for businesses are paid for by another attack on tax avoidance / planning, lower public sector pension costs and a positive near-term effect on receipts from the savings reforms.

The introduction of competitive National Savings bonds for pensioners from January 2015 will have the effect of tightening monetary conditions, assuming that the Bank of England has not already raised Bank rate by then. The assumption is that one-year bonds will yield 2.8%, which compares with an average rate on one-year bank instruments currently of 1.4%. The bonds will raise £10 billion, equivalent to about 4% of the household sector’s stock of time deposits. The competition is likely to force banks to improve their own rates, with a knock-on effect on interest costs for borrowers.

The Office for Budget Responsibility’s (OBR) assessment that the Chancellor is meeting his fiscal mandate rests on its judgemental assumptions that GDP was still 1.7% below its sustainable potential level at end-2013 and potential will grow by 2.1% per annum over 2014-18. The former is at odds with its statistical analysis of cyclical indicators, which suggests that the GDP / potential gap is negligible or even positive.

In a plausible alternative scenario in which potential output is 2% lower than in the central case and gilt yields 100 basis points higher, the cyclically-adjusted current budget would still be in small deficit in 2018-19, based on the OBR’s ready reckoners. The fiscal position, in other words, remains fragile and the OBR has arguably given the Chancellor too easy a ride.