Labour's debt crisis becomes a catastrophe
Peter Hoskin 2:24pm
Debt, debt, debt. That's the real story of today's Budget, as Brown has created an even worse mess than expected. Sure, £606 billion of borrowing over the next 4 years isn't all that surprising, but Darling's optimistic growth forecasts are. They mean that the Treasury is probably overestimating tax receipts for the next few years, and - in turn - that the real borrowing figures will be even worse than those in the Red Book.
Something tells you that the government knows this. As Robert Peston points out over at his blog, gilt sales are forecast at £220 billion this year - well above the £180 billion or so that most analysts thought we'd see. The markets will be wondering: just why does the Treasury need to borrow so much now? And the response to that question will have investors trembling.
UPDATE: The Red Book is using trend growth of 2.75 percent for the public finances. But, crucially, even this is exaggerated. HMT independent forecasts have 2.2 percent for 2011; 2.6 percent for 2012; and 2.6 percent for 2013.
UPDATE 2: Scratch the first update. The Treasury is using 3.25 percent growth assumptions for public finances from 2011 onwards. Absolutely unbelievable.
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AndyLeeds
April 22nd, 2009 3:17pm Report this commentI agree. The mess is far worse than thought. And sod all cuts in public expenditure.
Darling and the idiot Brown should be conveyed to The Tower this afternoon.
Tiberius
April 22nd, 2009 4:18pm Report this commentA question on the withdrawal of HRT relief on pension contributions if I may: high earners in the public sector won't be affected since their pensions are taxpayer funded. True or false?
SteveJ
April 22nd, 2009 4:27pm Report this commentI'll second that.
How about a petition to Her Majesty the Queen to Dissolve Parliament?
See here as a starting point: http://community.channel4.com/eve/forums/a/tpc/f/4170007323/m/15700036311
Moraymint
April 22nd, 2009 4:55pm Report this commentCan somebody explain to me the scenario from 2010/2011 onwards when Darling's growth forecasts are proved to have been fantastic and things start to unravel quickly.
What happens in practice as it affects me, the bloke on the street?
AndyW
April 22nd, 2009 5:00pm Report this commentNet borrowing is £175 bn. but the CGNCR is £220 bn. That is what drives gilt sales. Where is £55 bn. between "net borrowing" and "net cash requirement" (the same thing to most people) coming from? Bank bailouts?
C Powell
April 22nd, 2009 6:45pm Report this commentTiberius: you're absolutely right. Public sector high earners will be affected by the tax hike but not the pensions tax. Bastards!!
don
April 23rd, 2009 6:09pm Report this commentwhat if the economy 'only' falls by 2% this year? in the last few recessions the estimates usually turn out wrong
SteveJ
May 15th, 2009 12:56pm Report this commentRe: petition to Her Majesty the Queen to Dissolve Parliament
ahhh, the games afoot
see: http://www.gopetition.com/petitions/dissolve-the-british-parliament.html
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