According to the Pre Budget book the revenue loss next year, 2009-10, will be a stunning £72.7 billion. £8.6 billion of that is the policy change on VAT. The rest is the impact of the recession on Stamp Duty, NIC, Income Tax, Corporation Tax and the rest.
The borrowing this year was said by the Chancellor to have almost doubled to £78 billion. This figure left out buying bank shares and other expensive financial transactions. At the back of the Budget book it tells us the “Net financing requirement” is an astonishing £157.7 billion for just the current year. The Gilt market is going to be working overtime to try to supply all this money.
I was forecasting £140 billion (my £120 billion forecast plus the £20 billion budget packages). Gilt redemptions and other items take it over that to nearly £160 billion. The Treasury is gloomier than I have been about the outlook for revenue, given the downturn.