As soon as George Osborne finished his Budget Statement today, the Office for Budget Responsibility published its latest Economic and Fiscal Outlook, and we set about forcing it through our spreadsheets. Here are the results:
1. THE GROWTH CHART
There’s not much difference between the latest growth forecasts and those made for the Autumn Statement. They’re 0.1 percentage points higher here, 0.1 percentage points lower there, with one exception: the figure for last year has been revised downwards by a whole 0.4 percentage points, to 2.6 per cent overall. The OBR puts this down to, in part, “much weaker private consumption than we expected”. Will low oil prices correct that, as this year goes on?
2. THE BORROWING CHART
Politically and economically, this is the most striking thing to emerge from the Budget. Just look at the green and red lines for 2019-20. In the Autumn Statement, Osborne was anticipating a £23.1 billion surplus in that year. Now it’s just a £7 billion surplus. This is because the Chancellor has decided to spend more. Or, as the OBR puts it, “The Government now assumes that total spending will grow in line with nominal
GDP rather than whole economy inflation in that year… that means that implied public services spending in 2019-20 has been revised up by £28.5 billion.” He’s trying to reassure those voters who remain worried about the cuts to come.
(Incidentally, I haven’t included figures for the June 2010 Budget in this chart, as the OBR is now using a different measure of borrowing – as I explained last December.)
3. THE STRUCTURAL DEFICIT CHART
How is Osborne doing against his new and more complicated fiscal mandate, to have the structural budget within surplus by the third year of a five-year rolling forecast period? (Urgh.) Well, as it stands, the OBR gives him a “greater than 50 per cent” chance of meeting it. They reckon that it will be in a surplus of 0.8 per cent of GDP in 2017-18.
4. THE DEBT GRAPH
Osborne seemed thrilled with these numbers, not least because they have him hitting an old target. Remember the original supplementary target to have our national debt falling, as a share of GDP, between 2014-15 and 2015-16? The Chancellor has been on course to miss it since the Budget of three years ago. But now… now the debt is forecast to decline from 80.4 per cent of GDP in 2014-15 to 80.2 per cent next year. It’s barely more than a rounding error, but happily it’s in the Coalition’s favour.
5. THE DEBT CHART
But before Osborne starts tying bunting around Number 11, it’s worth looking at the debt as a cash sum. And whaddya know? It’s still on the up and up. It’s still expected to top £1.6 trillion in the next Parliament. It’s still pretty ominous.
6. THE EMPLOYMENT GRAPH
The macroeconomic story of this Parliament? I’d say so.