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MNI BRIEF: UK Debt Set To Fall As Share of GDP

(MNI) London

The UK has unveiled a new set of fiscal rules and the public finances were on track to meet them, Chancellor of the Exchequer Jeremy Hunt told parliament as he unveiled the government's fiscal package and reforms in the Autumn Statement Thursday.

In the current fiscal year the Office for Budget Responsibility forecasts borrowing of 7.1% of GDP or GBP177bn; then 5.5% next year and in 2027-28, 2.4% of GDP, with underlying debt-to-GDP peaking at 97.6% of GDP in 2025-26 and then falling to 97.3% in 2027-28, the end of the five year OBR forecast.

Hunt said that his two new fiscal rules were that underlying debt must fall as a percentage of GDP by the fifth year of a rolling five-year period and that public sector borrowing, over the five year period, must be below 3% of GDP. He said that after growing 4.2% this year the economy would contract by 1.4% in 2023, before expanding by 1.3%, 2.6%, and 2.7% in the following three years, with unemployment peaking at 4.9% in 2024. This is a less prolonged recession than forecast by the Bank.

MNI London Bureau | +44 203-586-2223 | david.robinson@marketnews.com
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MNI London Bureau | +44 203-586-2223 | david.robinson@marketnews.com
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