Treasury holds the line on spending as normal metrics are ditched
No tax hikes on evidence that they are likely to have more of a negative effect on growth than expenditure cuts
In this time of Covid-19 many of the normal budget metrics have been thrown out of the window. In this surreal period, a budget deficit of 9% of GDP for the fiscal year starting on April 1 2021 is not profligate. Rather, it is a solid reduction from the 10.1% of GDP deficit forecast in the October 20201 medium-term budget policy statement.
When looking ahead to what metrics would determine a “good” budget in the Covid environment we considered the quantum of revenue increase, the extent of expenditure slippage, the composition of the expenditure slippage, and the effect on the amount of debt issued. ..