Economics Weekly by Lloyds TSB

In terms of the stance of fiscal policy there is little new in the chancellor’s 2009 Pre-Budget Report compared with Budget 2009. It confirmed that government borrowing would continue to bridge the gap between government revenues and government receipts opened up by the financial crisis and the recession.

UK PBR: fiscal austerity delayed until recovery becomes entrenched

In terms of the stance of fiscal policy there is little new in the chancellor’s 2009 Pre-Budget Report compared with Budget 2009. It confirmed that government borrowing would continue to bridge the gap between government revenues and government receipts opened up by the financial crisis and the recession. This means that the budget deficit will be close to 13% of gdp in the next financial year. In the last financial year, borrowing has been revised up by £5.4bn to £95.4bn. In the current financial year, the budget deficit has been revised up by £2.6bn to £177.6bn. This is a little less than expected but nevertheless confirms a picture of continued government borrowing in order to ensure that economic recovery takes hold. Predictions for 2010-11 have also been revised up modestly to £176bn from £173bn in budget 2009. Projections further out are little changed, with the budget deficit in 2013-14 expected to be £96bn – a rough halving compared with borrowing for this year and next. Both this year’s and next year’s gdp projections are in line with the consensus. Beyond that, however, the economic growth projections are higher than the consensus.

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