The Budget delivered by Chancellor Jeremy Hunt is likely to fall into the latter camp.
To be fair to the Chancellor, he didn’t get much help from the Office for Budget Responsibility, whose independent forecasts underpin the Budget. The OBR revised up its forecast for economic growth in 2023 and 2024. But it revised down its forecasts for growth in later years. The net result is that, despite a brighter near-term outlook, it reckons the overall size of the economy — and therefore its ability to generate tax revenues for the Treasury— will be broadly unchanged by 2027/28. This may seem like eons away, but it is important because the Chancellor’s main fiscal rule is that debt as a share of GDP should be falling in five years’ time.
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