IEA economist comments on today’s public sector finances data
22 March 2022
SUGGESTED
In the Media
Professor Len Shackleton writes for CapX
21 March 2022
In the Media
Annabel Denham writes for The Spectator
22 March 2022
Government and Institutions
Commenting on the figures, Julian Jessop, Economics Fellow at free market think tank the Institute of Economic Affairs, said:
“The UK government borrowed about £5 billion more than expected in February, as higher debt interest costs offset a rise in tax revenues. Nonetheless, favourable revisions to past months mean that borrowing is still on track to undershoot the OBR’s forecast for the fiscal year 2021-22 by about £24 billion.
“Looking forward, rising inflation will keep debt servicing costs high. But OBR analysis (published in last October’s Economic and Fiscal Outlook) has already shown that an inflation shock is likely to reduce borrowing overall, thanks to the boost to revenues, even with much larger hikes in official interest rates.
“Inflation will surely reduce the burden of debt relative to national income, especially with real interest rates likely to remain low – even negative – for the foreseeable future. Indeed, debt has already fallen to 94.7 per cent of GDP, from a recent peak of more than 100 per cent.
“In short, there is nothing in these numbers to prevent the Chancellor from easing the pressure on households and businesses in tomorrow’s Spring Statement.”
ENDS
Notes to editors
Contact: Emily Carver, Head of Media, 07715 942 731
IEA spokespeople are available for interview and further comment.
“The UK government borrowed about £5 billion more than expected in February, as higher debt interest costs offset a rise in tax revenues. Nonetheless, favourable revisions to past months mean that borrowing is still on track to undershoot the OBR’s forecast for the fiscal year 2021-22 by about £24 billion.
“Looking forward, rising inflation will keep debt servicing costs high. But OBR analysis (published in last October’s Economic and Fiscal Outlook) has already shown that an inflation shock is likely to reduce borrowing overall, thanks to the boost to revenues, even with much larger hikes in official interest rates.
“Inflation will surely reduce the burden of debt relative to national income, especially with real interest rates likely to remain low – even negative – for the foreseeable future. Indeed, debt has already fallen to 94.7 per cent of GDP, from a recent peak of more than 100 per cent.
“In short, there is nothing in these numbers to prevent the Chancellor from easing the pressure on households and businesses in tomorrow’s Spring Statement.”
ENDS
Notes to editors
Contact: Emily Carver, Head of Media, 07715 942 731
IEA spokespeople are available for interview and further comment.
1 thought on “IEA economist comments on today’s public sector finances data”
Leave a Reply
SHARE
The culture and practices of the entire public sector needs investigation on an ongoing basis.
Some public sector staff target lower paid jobs so they can live in low-rent council & housing association properties. They can be on non-means tested benefits due to stress of their sedentary jobs and because the public ‘attack’ them? Their kids can get hardship scholarships to private schools.
Not only do local government employees have significant pay and pension benefits over their counterparts in the private sector. Many local authority employees are involved in buy-to-let property deals as their day jobs at the council are so sedentary.
The present government has been in power for over ten years but has not grasped the inner working practices and culture of the public sector.