To spare you the indignity and tedium of reading the Office for Budget Responsibility’s latest Economic and Fiscal Outlook, we’ve summed up its forecasts with seven charts. They include the forecasts from this year’s Budget, last year’s Autumn Statement and Osborne’s emergency Budget, so that you can compare and contrast.
1. THE GROWTH CHART. The Chancellor seemed mighty pleased with the revised growth forecast for this year; which, at a full 3 per cent, is 0.3 percentage points higher than the one presented in the Budget. He’s probably quite pleased with next year’s too, which is 0.1 percentage points higher. But, after that, the numbers are less buoyant. Growth has been revised downwards for 2016 and beyond, although not hugely. The OBR puts this down to sluggishness in the global economy, as well as to the Government’s own cuts.
2. THE BORROWING CHART #1. The borrowing figures are a little more complicated than usual. Earlier this year, the Office for National Statistics worked up a new measure for public sector net borrowing, and the Office for Budget Responsibility makes use of it here for the first time. Before we get on to that, though, here’s the traditional measure, by which borrowing is slightly down on the forecasts provided in the Budget.
3. THE BORROWING CHART #2. And here’s the new measure, which follows the standards set out in the European System of Accounts 2010. The OBR explains it on pages 23-24 and 179-180 of their Economic and Fiscal Outlook, but one of the implications is that Network Rail now adds to the borrowing totals each year. In any case, the latest numbers are – for the most part – higher than their equivalents from March. The OBR attributes this to “a large and increasing downward revision to receipts,” among other things.
4. THE STRUCTURAL DEFICIT CHART. As I’ve said before, the structural deficit is a rather unknowable beast, so these forecasts are even more dubitable than the others in this post. But this is also Osborne’s preferred yardstick for his deficit reduction plan, so we kind of have to pay attention to it. In which case, the latest numbers are worse than those in the Budget – but the OBR still thinks Osborne has a decent chance (“significantly greater than 50 per cent”) of meeting his fiscal mandate, which is to bring the current budget into balance within a rolling five-year period.
5. THE DEBT GRAPH. This is the one that I tend to call The Scary Graph. After all of the cuts and heartache, the OBR still reckons that the national debt will peak, in relation to the size of the economy, at 81.1 per cent in 2015-16. The fact that this comes after the next election means that Osborne is on course to miss his supplementary fiscal target. It doesn’t help that those same ESA2010 accountancy changes have lifted our current level of debt.
6. THE DEBT CHART. And this is even scarier. It suggests how Osborne is relying on economic growth to reduce the debt/GDP ratio. When expressed as just a cash figure, our national debt could keep on rising until 2018-19. Its projected peak? £1.65 trillion. Ugh.
7. THE EMPLOYMENT GRAPH. A good news graph to finish with.