You know the drill by now, ConservativeHome readers: after every Budget and Autumn Statement we produce a set of graphs to summarise the contents of the Office for Budget Responsibility’s Economic and Fiscal Outlook. Except this time’s slightly different. This time, for the first time, I’m not including the forecasts made in George Osborne’s original Budget of June 2010. There are two reasons for this. The first is that those forecasts barely reached into this Parliament, so there’s no longer much of them to include. The second is that, by now, everyone knows how wrong those forecasts were, so there’s no real reason to keep exhuming them. Here’s to the future!
1. THE GROWTH CHART
Ain’t no real difference between the OBR’s growth forecasts from July and those they published today. Some years (2014, 2019 and 2020) are 0.1 percentage points worse off, whilst others are (2016 and 2017) are 0.1 percentage points better off. Take it or leave it.
2. THE BORROWING CHART
Huzzah! Thanks to higher-than-expected tax receipts and lower-than-expected interest payments, the underlying fiscal position for this Parliament is £27 billion better than was forecast in July! But don’t get too excited just yet. George Osborne has decided to spend a large part of this windfall, meaning that the borrowing forecasts for the period are only £8 billion lower than they were in July (once the reclassification of Housing Associations from the private to the public sector has been taken into account, as shown by the darker red columns below). Still, the Chancellor remains on course to meet his target of achieving a surplus in 2019-20.
3. THE STRUCTURAL DEFICIT CHART
Osborne is also expected to achieve one of his targets from the last Parliament: to bring the cyclically adjusted current budget – aka, the structural deficit – into balance in the third year of the current forecast period. The third year of the current forecast period is 2017-18, and – yep – there’s that surplus. It’s even greater than was forecast in July. Although, strangely, the deficits for before 2017-18 are also greater than forecast in July. In this respect, the Chancellor has both loosened and tightened his fiscal plan.
4. THE DEBT GRAPH
And yet another fiscal target that Osborne is set to meet: to have the debt declining as a proportion of the economy in each year until 2019-20. The latest forecasts are even more comfortable than those from July, although, as with all of these forecasts, things can go awry. The Chancellor was, after all, comfortably set on his debt target in the last Parliament – until, as I warned in the Times (£) in 2011, he wasn’t.
5. THE DEBT CHART
Expressing the national debt as a percentage of GDP also expresses, in some way, our capability for paying it off. But it can also cover up a horrible truth. When the debt is expressed as a simple cash sum, it keeps on rising: by more than was forecast in July, to £1,715 billion in 2020-21.
6. THE EMPLOYMENT GRAPH
Jobs, jobs and jobs – although, as commenter CdBrux suggests below, the OBR’s expectation that unemployment levels will plateau from 2017 onwards is striking. Will they really be that intransigent?