The Chancellor stood at the despatch box again today and reeled off a new set of forecasts for GDP, government spending, national debt and the budget deficit.
The forecasts all fit nicely into Osborne’s promises of a £10 billion surplus by the end of the Parliament, but can we trust them?
They at least look more realistic than the last set which, despite this week’s media assertions of ‘unexpected downgrades’, we always knew were wildly optimistic.
The Chancellor repeated lines around ‘doing what is necessary to balance the books’, again blaming Labour’s irresponsible borrowing and spending – also based on dodgy forecasts – and ignoring that he had set out a similar set of plans only a few months before.
The GDP figures look fairly Conservative. But come with a massive health warning around global economic instability.
If a downturn hits, all of the figures for deficit and debt will be thrown out as tax receipts reduce. Unemployment rates continue to fall in the UK, but any rises as part of a downturn would have public spending implications, too.
And these national debt figures? Well, they largely rely on the economy growing and dwarfing the size of the debt, rather than the debt being paid down. So there’s a big ‘wait and see’ sign over them too.
The greatest part of my scepticism is reserved for the budget deficit – and eventually surplus – figures. The steady decline in the deficit would be easily disrupted by any of the forecasts for GDP growth, tax receipts or public spending falling short.
But look at what happens between 2018/19 and 2019/20. That’s a pretty big jump. I shall be very surprised if it actually happens.
And what does that mean? A deficit that lasts longer, more debt than promised, and the death of the Conservative Party’s reputation for economic competence. Thanks, George!
Update: The IFS have also raised concerns about the deficit forecast.