1 / 21

The public finances going forward

The public finances going forward. Robert Chote, Carl Emmerson, Christine Frayne and Gemma Tetlow Institute for Fiscal Studies. The fiscal rules . 1998 Finance Act Golden rule Sustainable investment rule Are they adequately serving the purpose they are meant to serve?. The golden rule.

jewelll
Download Presentation

The public finances going forward

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. The public finances going forward Robert Chote, Carl Emmerson, Christine Frayne and Gemma Tetlow Institute for Fiscal Studies

  2. The fiscal rules • 1998 Finance Act • Golden rule • Sustainable investment rule • Are they adequately serving the purpose they are meant to serve?

  3. The golden rule • Borrow only to invest • Current budget balance or surplus • Judged over the economic cycle

  4. A changing cycle? Budget 05: 7 year cycle Source: HM Treasury ; Morgan Stanley

  5. A changing cycle? PBR 05 and Budget 06: 12 year cycle Budget 05: 7 year cycle Source: HM Treasury ; Morgan Stanley

  6. A changing cycle? PBR 05 and Budget 06: 12 year cycle Budget 05: 7 year cycle PBR 06: 10 year cycle Source: HM Treasury ; Morgan Stanley

  7. A changing cycle? PBR 05 and Budget 06: 12 year cycle MS filter: 7 year cycle Budget 05: 7 year cycle PBR 06: 10 year cycle Source: HM Treasury ; Morgan Stanley

  8. Current budget balance Financial Year Source: HM Treasury

  9. Current budget balance Financial Year Source: HM Treasury

  10. Current budget balance Financial Year Source: HM Treasury

  11. Current budget balance Financial Year Source: HM Treasury; Morgan Stanley

  12. The sustainable investment rule • Debt at a stable and prudent level • This cycle: ≤40% of national income every year • Undefined over next cycle

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

  14. Green Budget forecasts • Slightly weaker current budget in the short term, stronger in the medium term • Golden rule to be met over the current cycle • Unchanged sustainable investment rule would be more constraining over the medium term

  15. Receipts forecasts Source: HM Treasury; IFS

  16. Current spending forecasts Source: HM Treasury; IFS

  17. Current budget balance Source: HM Treasury; IFS

  18. Cumulative surplus on the current budget Source: HM Treasury; IFS; Morgan Stanley

  19. Current budget balance Source: HM Treasury; IFS; Morgan Stanley

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

  21. Budget judgement • Little difference between Green Budget forecasts and Treasury • Golden rule expected to be met over: • current cycle • next cycle of at least 5 years • Unchanged sustainable investment rule would be more constraining • No new tax raising measures necessary unless higher spending is planned over CSR years

More Related