The Telegraph, March 13, Roger Bootle
Fiscal policy is rarely boring but during his two-year tenure, the Chancellor has had to endure a rollercoaster ride.
The economic effects of Covid and the various financial measures taken to deal with it sent the Budget deficit to 15pc of GDP only last financial year – a peacetime record.
Since then, the deficit has fallen back sharply and there was a good prospect of calmer waters ahead. Then along came the spike in energy prices and the Ukrainian war, which are bringing further upward pressures on borrowing. Are we entering a new fiscal crisis?
Remarkably, it looks as though this financial year, which ends in April, the Budget deficit will undershoot the forecasts made by the Office for Budget Responsibility (OBR) last October. It then thought that borrowing would come in at £183bn, amounting to 8pc of GDP.
With two months’ data still to come in, it now looks as though the total will be some £13bn lower, at about 7.2pc of GDP.
But don’t be deceived. Even before the Ukrainian war, for the next financial year the picture already looked less favourable than previously envisaged.
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