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18 Mar 2014
Flash: UK budget, are we nearly there yet??? – Investec
FXStreet (Guatemala) - Philip Shaw, Invested chief economist explained that the UK deficit is coming down and said of course this is good news.
Key Quotes:
“But it has taken four hard years to get where we are now, which is for borrowing to come down from 11% of GDP in 2009/10 to 6½% this year. In the intervening period, of course, the OBR has had to make frequent upward revisions to its borrowing forecasts.
“There remains a long way to go. On the OBR’s forecasts even reducing borrowing to sustainable levels, say a total deficit of 1-2% of GDP, let alone to
hitting a small surplus, will take another four years”.
“ Of course, fiscal consolidation during a recovery is easier than when the economy is stagnant, and the front loaded nature of the Mr Osborne’s reduction programme means that the worst of the heavy lifting is behind us. But major tax cuts at the half way point in the fiscal adjustment cycle would in our view be completely inappropriate and we hope that the Chancellor resists the temptation for any tax cuts without making genuine budget savings elsewhere”.
Key Quotes:
“But it has taken four hard years to get where we are now, which is for borrowing to come down from 11% of GDP in 2009/10 to 6½% this year. In the intervening period, of course, the OBR has had to make frequent upward revisions to its borrowing forecasts.
“There remains a long way to go. On the OBR’s forecasts even reducing borrowing to sustainable levels, say a total deficit of 1-2% of GDP, let alone to
hitting a small surplus, will take another four years”.
“ Of course, fiscal consolidation during a recovery is easier than when the economy is stagnant, and the front loaded nature of the Mr Osborne’s reduction programme means that the worst of the heavy lifting is behind us. But major tax cuts at the half way point in the fiscal adjustment cycle would in our view be completely inappropriate and we hope that the Chancellor resists the temptation for any tax cuts without making genuine budget savings elsewhere”.