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Public finances

Dive deep into the public finances under Gordon Brown's leadership analyzing tax changes, national income, fiscal rules, and future implications, outlining adjustments needed for economic sustainability.

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Public finances

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  1. Public finances Christine Frayne Institute for Fiscal Studies

  2. The big picture Labour I Labour II Source: HM Treasury

  3. Mr Brown’s fiscal record Source: HM Treasury; IFS

  4. Mr Brown’s fiscal record Source: HM Treasury; IFS

  5. Mr Brown’s fiscal record Source: HM Treasury; IFS

  6. Mr Brown’s fiscal record Source: HM Treasury; IFS

  7. Sharing the proceeds of growth • In 2007-08 compared with 1996-97 • Families on average pay £5600 more tax in real terms • National income is higher by £356bn • On average £11700 per family • So once tax has been deducted • Families on average still keep £6100 more

  8. Current budget: total change Source: HM Treasury; IFS

  9. Current budget: total change Source: HM Treasury; IFS

  10. Current budget: total change Source: HM Treasury; IFS

  11. Current budget: total change Source: HM Treasury; IFS

  12. Current budget: total change Source: HM Treasury; IFS

  13. Budget measures Source: HM Treasury

  14. Budget measures Source: HM Treasury

  15. The fiscal rules • Golden Rule • Borrow only to invest • Current budget balance or surplus • Judged over the economic cycle • Sustainable Investment Rule • Debt at a stable and prudent level • This cycle: ≤40% of national income every year

  16. Current cycle total = 0.8% of GDP or £10.5bn Current budget balance Source: HM Treasury

  17. Current budget balance Next cycle Source: HM Treasury

  18. Structural current budget balances Source: HM Treasury

  19. The fiscal rules • Golden Rule • Borrow only to invest • Current budget balance or surplus • Judged over the economic cycle • Sustainable Investment Rule • Debt at a stable and prudent level • This cycle: ≤40% of national income every year

  20. Will the investment rule be met? Source: HM Treasury; IFS

  21. Will the investment rule be met? Source: HM Treasury; IFS

  22. Debt could exceed 40% 50/50 chance Source: HM Treasury; IFS

  23. Conclusions • Slight deterioration in the public finances • Small net impact of new measures on Exchequer • Large gains and losses • Both fiscal rules on course to be met • Relies on further: • Increases in tax burden • Reductions in public spending as a share of national income

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