George Osborne's 2016 Budget Explained In 7 Charts

The "sugar tax" might grab the headlines after 2016's UK Budget, but the bigger story shows George Osborne having to find billions in extra money to meet the targets he set himself.

Justin Tallis / AFP / Getty Images

1. The UK economy is growing more slowly, meaning there is less money around. This means the UK government borrows (slightly) more, and so Osborne will miss a target he set himself.

Office for Budget Responsibility

The chancellor said last November how much he expected the UK economy to grow over the next few years. These figures are set by an independent body in the Treasury called the Office for Budget Responsibility.

Unfortunately for Osborne, the projections have become less optimistic in the last three months. The OBR thinks we'll grow less (about 2.1% a year instead of 2.4%) and that means to meet his own rules on government spending, Osborne needs to raise more tax or make more cuts.

It also means the chancellor has missed a different rule he set himself after the election: to cut borrowing as a percentage of the UK economy every year until 2020. Of course, now he's missed that target, he's playing down its importance.

2. The OBR cut the UK's growth figures because they think we'll be less productive.

Office for Budget Responsibility

The OBR changed their mind on how productive each UK worker would be from November last year to this March.

That's not their way of saying they think we slack off too much: Instead, it's a measure for how much stuff each worker makes each hour. They still expect it to go up – if we all worked in a factory, it'd be a way to say each person would churn out extra goods each hour.

The UK's productivity has been pretty flat for years, but everyone expects (or hopes) it'll start growing again soon. The OBR are still optimistic it will, but less so than before. (They do admit they're still pretty unsure.)

3. That's left Osborne needing to find more than £12 billion to keep his promises.

Office for Budget Responsibility

This chart is quite complicated, but is essentially showing how George Osborne has used this Budget to dig himself out of a spending hole. It's the key chart of this Budget.

At the far left, you see a £10 billion surplus, which is what George Osborne promised at the election to deliver by 2020 – meaning the government will collect £10 billion more than it spends, and use this to pay down the national debt.

Then the big red bars show what the new, lower growth figures did to that prediction – in short, they knocked a huge hole in it, through the UK having less taxes to collect (because we're not so rich), and having to spend more (because we're not so rich). The first yellow bar shows that because inflation is also forecast to be lower, Osborne would claw some cash back.

That brings us to the blue bar in the middle of the chart: Before George Osborne stood up on Wednesday, instead of having a surplus of £10 billion, he had a deficit of more than £2 billion.

The remaining yellow bars are the net effect of what he said during the Budget. Departmental spending got cut a little bit more, while some technical changes to pensions brought in a few billion. The bulk of the money, though, was increases to tax (mainly measures on corporate tax avoidance, which some people worry he won't manage to collect) and welfare cuts – of which more later.

The end result? George Osborne is, on paper, back to the £10 billion surplus he promised us all.

4. ...but George Osborne is spending now and promising that he'll save up later.

Tom Chivers / BuzzFeed News

We've all done it: We know we shouldn't spend so much. We should put £50 in our new Lifetime ISA instead of going down to the pub. We absolutely should not go back into our overdraft this month.

And yet, once we inevitably do, we know next month will be different. Next month, we're going to really get serious about budgeting.

On the face of it, George Osborne is just like us. The graph above shows the effect of the changes in Wednesday's Budget. If the bar is below the line, the government is spending more in those years. If it's above, they're saving up.

This chart shows that Osborne will spend about £7.5 billion more next year, £5 billion more the year after that, but then recoup it all (and more) with a huge £13.9 billion savings binge in 2019/20.

The only issue is, that's an election year, and political experts – including ITV's political editor, Robert Peston – seem sceptical as to whether the chancellor will really turn the screws while he's trying to win everyone's votes. Is he more disciplined than the rest of us?

There is one important caveat: A big chunk of the "spending" is actually a delay of two years to a new way of collecting corporation tax from big companies, which Osborne quietly pushed back in this year's Budget. That's had the effect of taking money away from 2017/18 and 2018/19, while boosting expected cash in 2019/20 by £6 billion. The rest of the gap, though, is not so easy to explain, and will need to actually be collected and/or saved.

5. The government is expecting to save a ~lot~ of money through reduced disability payouts.

Tom Chivers / BuzzFeed News

Ministers have mentioned "changes" to Personal Independence Payments (PIP), money given to people with disabilities to help support independent living. These mainly involve reducing the number of "points" on the system for certain criteria, including needing help to get dressed or use the toilet. People need a certain number of points to qualify for help.

Jeremy Corbyn referred to this as a "billion-pound" cut in his response to the Budget, but that may be an understatement. Figures included in this year's Budget document show just how much this change is expected to save: a little over £4.4 billion in the next five years – around £1.3 billion a year from 2018 onwards.

6. Freezing fuel duty is popular but expensive.

Tom Chivers / BuzzFeed News

George Osborne likes announcing each Budget that he's freezing fuel duty as it pleases the millions-strong driver lobbies. But this means he's never reversed the official accounting rule that expects duty to rise.

The result is that each time he announces a freeze, the money the higher duty would have raised has to be knocked off government accounts. So the freeze to fuel duty announced in the Budget will cost about £2.5 billion over the next five years – money the chancellor has to find elsewhere.

Osborne has now frozen fuel duty for six Budgets running, meaning the cumulative cost of this decision will now be somewhere in the region of £20 billion.

7. No one knows anything, and so all of this will keep changing.

OBR / ONS

It sounds quite strange to say, but no one really knows how fast the UK is growing right now, let alone how fast it'll grow in two years' time – it's quite hard to find out exactly what's going on, and the Office for National Statistics (ONS) spends a lot of time and money guessing.

Last Autumn, the chancellor managed to arrange a bunch of headline-grabbing giveaways because forecasts got more optimistic. In this Budget he had to claw some money back because they got less cheery again.

This seesaw will keep on happening, because Osborne has committed to be in a certain place (a £10 billion surplus) by a fixed date (2020). The chart above shows what the ONS and OBR think economic growth will be over the next few years.

By 2017, their range includes anything from less than 0% to more than 4% – and during the economic crisis, the economy actually shifted outside even the wide range predicted.

So despite all the precise figures everyone's talking about today, remember: No one really knows anything, and all of this will keep changing.