John Philpott, chief economic adviser, CIPD

I’ve just finished watching the chancellor of the Exchequer George Osborne make his second budget speech to the House of Commons. Although by introducing a fiscally neutral budget, the chancellor reiterated that he will stick to his fiscal Plan A whatever the short-term pain this will cause, the positive tone of Mr Osborne’s initiative-packed statement, with its very business-friendly "plan for growth", matched the sunny spring weather in Westminster.

Indeed, so enthusiastic was the chancellor that at times he literally coughed out his words as his voice grew ever more hoarse. I found the timbre of Mr Osborne’s croaky delivery oddly reminiscent of his Tory predecessor Nigel (now Lord) Lawson, whose name the chancellor mentioned in his speech in tandem with that of 18th century economist Adam Smith, which is always a sign that the budget is thought by its author to be historically groundbreaking.

Whether this proves to be the case remains to be seen. But budgets are best assessed in relation to their overall short-term and long-term impact on household finances, company profits and job prospects. On this score, this year’s budget amounts to a mix of pluses and minuses wrapped up in a cloak of uncertainty.

There was good news for households looking for some relief from the impact of high fuel prices – fuel duty is being cut immediately by 1p a litre while a planned 5p hike has been scrapped. Most businesses should be feeling chipper on hearing that the main rate of corporation tax is being reduced by 2 per cent to 26 per cent next month and eventually to 23 per cent by 2014 (though in the case of banks this is offset by an increased levy payment) and probably ecstatic at the prospect of less regulation.

Employers detest nothing more than red tape and, despite the fact the UK has one of the least regulated and most flexible labour markets in the developed world, the coalition’s Plan for Growth (published alongside the budget) in effect promises to both cut regulation (especially for very small firms and start-ups) and attack the causes of regulation (mostly by bashing EU bureaucrats).

However, those tempted to conclude that the budget is all sweetness and light will be sadly disappointed. A fiscally neutral budget is exactly what it says on the tin – it makes no net difference to the amount of spending power the chancellor adds to, or as in this case, subtracts from the economy. In other words, anything Mr Osborne has seemingly given away with one hand he will have taken back with another (it normally takes a day or two for the number-crunchers at the independent Institute for Fiscal Studies to work out who are the relative winners and losers). As for the net negative impact on spending, the forecast from the Office for Budget Responsibility (OBR), which now accompanies the budget, shows that for all Mr Osborne’s talk of economic growth, things will get worse before they start to get better.

The OBR has cut its forecast for economic growth in 2011 from 2.1 per cent to 1.7 per cent. Unemployment is now expected to rise by around 100,000 this year before peaking at 8.2 per cent (2.6 million), while price inflation will easily outstrip average pay increases until 2013. These forecasts have moved closer to the economic outlook for 2011 published by the CIPD following Mr Osborne’s first budget last year, but still look very optimistic for 2012 onward. They may well have to be revised further downward in due course.

In particular, the OBR and the chancellor remain upbeat that investment and exports will drive the economy forward and more than compensate for the triple squeeze on domestic spending caused by continued tight credit conditions, cuts in public spending plus tax hikes, and the impact of the current spike in price inflation on real incomes. This view looked optimistic but plausible when the chancellor published his first budget. In today’s climate of mounting domestic and global economic uncertainty, it looks more optimistic and less plausible, regardless of the warm words of support the budget is likely to receive from the business lobby. The UK might, in due course, witness what Mr Osborne calls the "march of the makers" but their initial steps will almost certainly be tentative.

Set alongside the OBR figures, Mr Osborne’s ‘pain today, growth tomorrow’ budget reads like a long-term fitness plan for an economy whose immediate pressing need is for more sensitive intensive care than the chancellor is prepared to provide. If the economy remains robust enough in the short-term to take full advantage of the chancellor’s battery of mostly sensible micro-measures, this year’s budget might in time come to be viewed as a milestone on the road to supply-side reform. But the risk remains that by applying too much short-run fiscal pain to a still ailing economy the chancellor will, at best, reduce the effectiveness of his long-term plan for growth and, at worst, inflict chronic damage that might take a decade or more to recover from.