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UK FISCAL: New fiscal rules and near-term schedule (2/3)

UK FISCAL
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  • In terms of the fiscal rules, the previous government's primary rule was that public sector net debt excluding the Bank of England to fall in the fifth, and final, year of the forecast. (Note that the margin that this is met by was referred to as the "headroom" when analysing previous budgets). There was also a supplementary "target" for PSNB to be below 3% of GDP in the fifth year of the forecast.
  • The Labour manifesto included commitments to balance day-to-day spending with tax receipts (but using no specific definitions) and for debt to be falling as a share of the economy in the fifth year of the forecast (again not using any specific definitions).

  • On the former, it appears as though Labour will look to balance the "current budget" - but probably to exclude the BOE from this. Under the OBR's previous forecasts (made alongside the last Conservative Budget in March), the current budget (before any definition changes) was not in balance for any future year through the forecast horizon (ranging from current deficits of between GBP2.7-8.2bln). This is before the GBP21.9bln extra departmental spending and public sector pay deals that have already been announced.

     

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  • In terms of the fiscal rules, the previous government's primary rule was that public sector net debt excluding the Bank of England to fall in the fifth, and final, year of the forecast. (Note that the margin that this is met by was referred to as the "headroom" when analysing previous budgets). There was also a supplementary "target" for PSNB to be below 3% of GDP in the fifth year of the forecast.
  • The Labour manifesto included commitments to balance day-to-day spending with tax receipts (but using no specific definitions) and for debt to be falling as a share of the economy in the fifth year of the forecast (again not using any specific definitions).

  • On the former, it appears as though Labour will look to balance the "current budget" - but probably to exclude the BOE from this. Under the OBR's previous forecasts (made alongside the last Conservative Budget in March), the current budget (before any definition changes) was not in balance for any future year through the forecast horizon (ranging from current deficits of between GBP2.7-8.2bln). This is before the GBP21.9bln extra departmental spending and public sector pay deals that have already been announced.