The economic effect of such small raises, if the minimum wage is set close to the equilibrium point for low and unskilled workers, is not huge in itself, though it has ramifications for general wage levels, for bargaining over wages and benefits.
Mr Osborne's advisers would say any increase in investment that is large enough to have a material effect on the recovery would set off alarm bells in the markets, even if the formal deficit plan had not been undermined.