As Duncan Weldon says, the consensus forecast for the UKs future borrowing indicates that the Government is going to miss their borrowing target.
Another way of thinking about this is that the fiscal forecast is now slipping from the “Good” projections, whether that of Alistair Darling in March 2010, or of the OBR subsequently, back towards what you might call the ‘Bad Darling” scenario: what the deficit would have looked like if the coalition hadn’t announced it’s June Budget changes.
You can see the “Bad Darling” scenario in the IFS Green budget, chapter 3, where the authors try to seperate out what the Deficit “would’ have been forecast, if the government had not implemented the fiscal tightening proposed by George Osborne.
You can see the results below. The red line is the deficit as projected by Alistair Darling in March 2010 – the “Good Darling” line.
The Brown line is what the IFS think the deficit would have been projected in November 2011 – had the coalition “extra tightening’ not1 been introduced. Call this the “Bad Darling” line.
The yellow and green line represent the government/OBR projections. Note how closely they track the “Good Darling” line.
The Black line is the Treasury’s new consensus forecast.
It’s now much, much closer to the ‘Bad Darling” line than the “Good Darling” projections.
The IFS said before the Budget that:
“All things considered, it seems likely that, in the absence of the additional fiscal tightening announced since the general election, borrowing would have been on course to be closer to £76 billion in 2016–17 than to the £26 billion that was forecast in the March 2010 Budget.”
- In my rush to publish I originally missed out this “not”. Oops! thankfully Richard N caught the error in the comments [↩]
- Specifically the IFS authors said “had the last Labour government and the current government not announced any permanent net tax increases or spending cuts over the last few years, public borrowing in the UK would have been left at an unsustainably high level.” P50 here [↩]