Lots of borrowing, but well below forecast

I sympathise with the official forecasters at a time of big change in the economy, with a large fall in output and incomes stemming from the measures to curb the pandemic. Getting forecasts right when the economy is falling further and faster when the measures go in and recovering faster and more when they are removed than in previous cycles makes it difficult to get the numbers right. I have had less sympathy with the undue gloom the OPBR put into their November 2020 and March 2021 forecasts, and said at both timeS I thought they were exaggerating the deficit. So it has proved.

In November they forecast a deficit of £394 bn for 2020-21.In March this year forecasting the year to end March which had almost ended, they said the deficit would be £354bn, a £40bn fall in four months. Yesterday they announced the provisional outturn at £303bn, £51 bn down on a few weeks ago and £91bn down on November. They point out they were thinking in March of £27bn of losses on loans which have not yet materialised and would not be a new demand for cash or borrowing anyway. Even taking this out it still leaves the forecasts way too gloomy. They underestimated the amount of tax revenue collected, and overestimated state spending.

I am raising this again because it will have knock on effects on future years. The £51bn revision downwards to the estimated deficit between this March and April is twice as much as the government now thinks it needs to add to tax revenue in 2024-5 to control the deficit. Could it be that those future years forecasts are also wrong? Might they be too pessimistic, so how necessary is the extra tax? I have other issues with the future tax policy over how you do secure more revenue and what the role of growth is in meeting the state’s requirements. Even in their own terms, however, the OBR should examine the possibility that they have been too pessimistic for future years, and consider the need for some caution in drawing early policy conclusions for future years from forecast numbers which have recently proved so unreliable. Did they urge a needless or undesirable tax rise?

71 Comments

  1. Peter Wood
    April 24, 2021

    Good Morning,
    Do be careful Sir John, with this better than expected DEFICIT, Bunter Boris may, if he reads this blog, take it as a sign he can go out and spend, spend, spend!
    Perhaps you could temper his profligate nature by comparing new government total debt to GDP with earlier years? What is the expected government deficit for this financial year?

    1. jerry
      April 24, 2021

      @Peter Woods; You mean like how the UK spent after WW2, despite having a far higher war debt that we have from the war against Covid19, yet the debt was correctly structured and the two decades that followed were some of the UK’s most productive, whilst living standards increased beyond expectations.

      In 1945 all major political parties agreed, there would be no return to the old ways, the same pledge needs to be made post Covid, our 40+ year experiment with Monetarism and Globalism should be laid to rest.

      1. Narrow Shoulders
        April 24, 2021

        Who got rich on the interest from the wars Jerry. We should have printed it ourselves rather than borrowing it.

      2. Peter Wood
        April 24, 2021

        Clearly you don’t get the drift of my comment. But since you like to repeat history, lets all have rationing again, which continued until 1954, and income tax at 30-50%, I understand.

        1. jerry
          April 24, 2021

          @Peter Wood; “Clearly you don’t get the drift of my comment.”

          Clearly you didn’t explain your comment then, especially if you think anyone wants a return to rationing – quite the opposite!

          1. Peter Wood
            April 24, 2021

            I don’t need to explain it if you have the grey matter to comprehend, see Peter’s comment below…..

          2. jerry
            April 25, 2021

            @Peter Woods; The feeling is mutual, see the teaching of John Maynard Keynes…. 😛

      3. forthurst
        April 24, 2021

        The Bank of England was nationalised in 1946. Before that time, the bank could turn on the poverty tap at will.
        It has been claimed by our politicians that the ‘German Economic miracle’ after WWII was as a result of Bomber command very kindly flattening the whole of Germany thereby forcing the Germans to ‘build back better’ whereas we poor British were forced to soldier on with our clapped out pre-war industrial equipment and confrontational industrial relations. The truth is that the quality of governance in this country was of the same calibre as the small-minded ignorant politicians who would debate for hours about whether we should be allowed to import bananas and how much meat or many eggs a week we should be allowed. This later of course is now a matter of political debate by small-minded ignorant politicians.

        1. notachance
          April 24, 2021

          I do remember well visiting in the 1950’s and 60’s and the small minded
          UK customs officials tearing the returning Brits apart at the airpirts seaports looking for receipts for overseas purchases etc and now that you have voted for it all back again.. meaning taking back control.. beggars belief..

          1. jerry
            April 25, 2021

            @notachance; You mean voting to having HMRC Customs checks that treat goods or people entering from the USA, Canada and Australia, for example, as those entering from France, Germany and Switzerland for example?

      4. Mitchel
        April 24, 2021

        Look at the inflation we have endured since the end of world war two.Also the institutional framework that permitted this recovery in the west after the war-the Bretton Woods institutions- is being challenged by a new eastern bloc.Just as hard power has made a come-back,so might hard money.Look at the massive buying of gold by non-G7 central banks in recent years and the astonishing rise of Bitcoin,now evidently crossing over into the mainstream.

        1. jerry
          April 24, 2021

          @Mitchel; Not quite, look at the inflation we, the western world, have had to endure since the advent of the Arab oil embargo…

      5. Fedupsoutherner
        April 24, 2021

        Oh,goody. Can’t wait for another war Jerry.

        1. jerry
          April 25, 2021

          @FUS; We were not at war between 1945 & mid 1950 to mid ’53, we were not at war again [1] until 2003, so I’m not sure what your point is?

          [1] apart from 9 days in the late 1956 & and again for a month or so in early 1991

          1. Mitchel
            April 26, 2021

            Korean War?

    2. Everhopeful
      April 24, 2021

      Actually last year the IMF urged govts to “spend, spend, spend”.
      Very counter intuitive.
      So BB only doing as he is told as per usual.
      With regard to blogs…he has a very interesting one online. A man who changes his mind a lot!
      Un homme à mener par le nez.

    3. Peter
      April 24, 2021

      Peter Wood,

      Yes talk of deficits does rather skirt the big issue of money wasted under the so-called conservative government of Boris and his chums.

      ‘Test and trace’ under Dido Harding’s watch is but one notable failure.

  2. Ian Wragg
    April 24, 2021

    Forecasting is like astrology, guesswork. Pretty much like Imperial College and their modelling.
    You’ve found Labour’s magic money tree so all is good.
    Has anyone Forecasting how much Spaffers net zero is going to cost the average household and how many jobs it will export or destroy.

    1. Lifelogic
      April 24, 2021

      Philip Hammond a few years back put the net zero cost at £ 1 trillion. When I do the sums I get to at least three times this sum and that is without the additional damage done by rendering the UK totally uneconomic and uncompetitive, the deterring of inward investment and the brain drain it will cause. Total insanity from May/Boris/Carrie/Sunak.

      1. Andy
        April 24, 2021

        And what is the cost of not doing it?

        I put it at your grandkids generation being dead.

        1. Peter2
          April 24, 2021

          Current temperature increases are way behind predictions since 2000.
          Talk of extinction is totally ridiculous.
          Do you think people will stand still if flood water were to rise above their heads?
          People have survived on this planet for thousands of years in places where temperatures are either freezng cold or topically hot all year round

  3. Oldtimer
    April 24, 2021

    It is hard to believe in the integrity of any data produced by government or its advisors. Mostly it appears designed to support a policy or measures politicians seek to justify. We have seen it in forecasts in areas such as health (the pandemic), the climate (we are to be boiled alive) as well as in financial matters. Instead of attempting futile forecasts (really variations on project fear) they should attempt applying common sense instead. For most politicians, it seems, this is a big and impossible ask.

    PS Cummings has cast serious doubt on the integrity of Johnson over recent claims about the Dyson leaks. It is time the Conservative party considered who his successor should be.

    1. Mark
      April 24, 2021

      Consideration should focus on those who will end the destructive net zero policy.

    2. Zorro
      April 24, 2021

      I suspect that Kim Jong Son will not survive this even though Labour are a useless opposition.

      zorro

    3. Zorro
      April 24, 2021

      Opinion polls are the same – justification for their mad policies. Cummings will bury Johnson who is run by his girlfriend.

      zorro

    4. Alan Jutson
      April 24, 2021

      Perhaps, just perhaps, the person leaking all this info may actually be his wannabe successor, or is close to them.

      Boris certainly should be careful about trying to take on Cummins in my view, it will only end in tears.

    5. X-Tory
      April 24, 2021

      And who would satisfy you as Boris’s successor? For me, apart from our very own Sir John, there are only a handful of other Tory MPs who could persuade me to return to voting Conservative. Philip Davies, for instance, or Steve Baker – but what realistically are their chances of getting the job? It will probably go to a Cabinet minister, such as Sunak, or Gove or the like, and they are all compromised by their support for all the appalling policies we have been subjected to, such as the Brexit betrayals, the lockdowns, the tax rises, etc.

  4. agricola
    April 24, 2021

    It is difficult if not impossible to build a house on unreliable foundations. Foundations being the forcasts and the house being the future economy. The forcasts must sap the enthusiasm for doing anything radical, like sorting our dreadful and over burdonsome tax situation. So we continue with a cautious tweak here and there that net out at no effect. Where we need quiet revolution we get timidity. I see no master financial plan post Brexit and Covid that will get the economy really flying. Declaring a freeport does not make it work, but ignoring Biden and taking an axe to Corporation Tax might. The one bright spot is Liz Truss and her department creating opportunity around the World. Our Chancellor and Treasury need to facilitate all the other elements necessary to a success story. Who will cross their T and prove we have a government of enterprise at a time of opportunity.

    1. acorn
      April 24, 2021

      Have a read of “Trade agreements that took effect from 1 January 2021 Agreements with the following countries and trading blocs took effect from 1 January 2021” (Google “…”).

      Liz’s list of the above, is showing total trade value (imports plus exports) with non-EU countries of circa £188 billion. She has to score at least £744 billion to break even on the deals we used to have with non-EU countries via our EU membership.

      1. Mike Wilson
        April 24, 2021

        Sorry, have we stopped trading with the EU? Your figures are based on us doing no trade with the EU. Why?

        1. acorn
          April 25, 2021

          The EU-UK Trade and Cooperation Agreement contains the EU-UK Free Trade Agreement. This is Lord Frost’s domain, Lizzy deals with the rest of the world. In 2019 UK:-
          Exported £294 bn to EU.
          Imported £374 bn from EU.
          Exported £396 bn to the rest of the world.
          Imported £348 bn from the rest of the world.

          UK Total Trade £1,412 bn

  5. Lifelogic
    April 24, 2021

    “Did they urge a needless or undesirable tax rise?”

    Indeed they did and a totally counter productive one too. In the UK we are hugely overtaxed and over regulated already. Increasing the tax rate will reduce the size of the tax base, deter inward investment and encourage people and businesses to leave. The Net Zero lunacy and the current (massively net damaging) lockdown will also add petrol to this idiotic self inflicted Boris/Sunak fire.

  6. Everhopeful
    April 24, 2021

    Did governments always relentlessly forecast everything from the weather to our illnesses?
    Or is it just since they discovered computers?
    They make the years flash by too quickly and spoil the true outcome with doom mongering or over optimism.
    Why can’t we just live in the present for a while? And just get things right!

    Dom-war/revenge declared on BJ..well…good!

    1. Lifelogic
      April 24, 2021

      Why on earth did:- number 10 sources accuse Dominic Cummings of leaking Boris Johnson’s texts with Dyson and Saudi crown prince and with the PM is said to be “saddened” about Mr Cummings’ “systematic leaking”, according to a source quoted by The Times.

      It seems highly unlikely to be true to me so who is driving this and what on earth do they think is to be gained?

      1. Everhopeful
        April 24, 2021

        Some sort of distraction?
        To take our eyes off something else.

    2. Mike Wilson
      April 24, 2021

      Why can’t we just live in the present for a while? And just get things right!

      Governments should not be concerned with the present. They should be concerned with the future. The present is the result of governments past. You can’t, in a sense, change the present. The problem with our political system is the focus on the present or, rather, the focus on the next bloody election. Where is the long term planning for increased electricity production and storage. For our appalling education system?

      1. Everhopeful
        April 24, 2021

        Yes. I think I kind of meant that.
        Like…today we start paying back the debts…or today ( as you say) we teach kids properly.
        Today we make a real start.
        And our future WILL be better!

  7. turboterrier
    April 24, 2021

    How do you secure more revenue?

    Definitely not signing up for all this renewable madness that our leader has committed us to.
    This country needs an abundance of really cheap energy to give our ever diminishing industrial base at least a cat in hells chance of being really competitive and give us an employment base and greater production that will increase turnover which can be taxed.
    China not being stupid it will sit on the fence for a few more years and when after all the other civilised counties have thrown themselves on the sword of climate change religion they will start to address there CO2 outputs and fossil fuel usage. Cause they will why the rest of their competitors have all but bankrupted themselves they will be so industrially powerful they will control the world markets and not one shot was fired.
    Does Boris and the likes of Gumme and the rest think that the rank and file are just going to sit back and do nothing?
    1% of CO2 of the worlds output that is what we are accountable for.
    Get this country prosperous again, use what we have under or soil in abundance and get the people working and be able to afford good living accommodation have a good life with all that entails. If BoJo and his cronies cannot deliver the dreams and policies we need he has got to stand aside.
    If Cummings decide to sell his story on the media carousel we might get rid of this “we are only playing leapfrog “as the first staff officer jumps over the second staff officers back. Scene from O what a lovely war, sooner than they might think. The clock is ticking.

  8. DOM
    April 24, 2021

    The forecasts aren’t right nor wrong, they are massaged and contrived for political ends though I suspect Mr Redwood knows this. The ever increasing demands of the Socialist State will strip bare your assets, your freedoms and your liberties. We are seeing this today but at present sovereign debt is being used to cushion the blow on voters, call it an act of deceit. In essence, ‘the demand for payment hasn’t arrived yet’.

    John’s constant drive by more politicised State spending rather than State reform is troubling. The more the State spends the fewer our freedoms to take decisions in our best interests. It seems Mr Redwood’s embraced all that we see today. That is deflating for if a small State libertarian has capitulated then it suggests that opposition to the barbarity of Socialism has evaporated.

    I forecast that in under a decade US democracy will have been dismantled with British democracy not far behind. All State spending we see today is politically driven and in preparation for that moment. The Socialist State is slowly taking control by stealth using all and any issue to do so.

    It is simply unacceptable for backbench Tory MPs and indeed some moral MPs to remain silent on what we are seeing, a descent into authoritarianism.

    Reply I have identified large sums that the state should not be spending. The Treasury is not interested in those.

    1. turboterrier
      April 24, 2021

      Reply to reply
      Therein lies the problem. The treasury is riddled with a mindset of just listening and performing for themselves. It needs a seismic overhaul to drag it into the 21st century.
      In the real world there were lots of companies driven by 100 of years culture that couldn’t or wouldn’t change and they have all gone or been taken over.
      The only real constant after death in life’s tapestry is change.

    2. Hope
      April 24, 2021

      Reply to reply, Treasury does not decide, Johnson’s govt decides! You are speaking to the wrong people!

    3. Everhopeful
      April 24, 2021

      +1

    4. Everhopeful
      April 24, 2021

      Yes…more LOUD, vocal opposition to our descent would be good.
      Unless in some way counter productive? Politics is maybe …well.. hard to forecast outcome of action?
      Shout it from the rooftops? Too existential for present reticence?

  9. Everhopeful
    April 24, 2021

    Never mind forecasting, reading the runes, telling the Tarot ( you might as well!).
    What did anyone EXPECT when they ripped apart the economy?
    Achieved what two world wars had never managed.
    That our abandoned capital would suddenly be paved with gold ?
    The madness/deception/duplicity/fraud/evil makes me feel ill.
    ( Isn’t capitalism in decay…fascism? …according to Lenin ).

    1. Mike Wilson
      April 24, 2021

      ( Isn’t capitalism in decay…fascism? …according to Lenin ).

      I don’t know. I’d rather live here than in Russia.

      1. Everhopeful
        April 24, 2021

        But we are seeing the beginnings of the unthinkable.
        And the Great Reset is anti-capitalist.
        Anti- democratic come to that.

    2. Zorro
      April 24, 2021

      The government are desperately trying to avoid being rightfully held responsible for this nonsense. I sincerely hope that they fail. I am a Tory bull not vite for these numpties anymore…..

      zorro

      1. Zorro
        April 24, 2021

        But will not vote…..

      2. Everhopeful
        April 24, 2021

        +1

        1. Everhopeful
          April 24, 2021

          Getting more and more difficult to vote and I don’t even see any “alternative” parties standing around here in May. We do have Independents though…usually failed Tory or Labour retaining allegiances.
          Not that they’d do owt but split the vote, if they were lucky.
          Or maybe deliver a slightly bloodied nose?
          Not sure. No idea actually!

          1. turboterrier
            April 24, 2021

            Everhopeful

            If the parties on the paper do not light your candles, still vote by writing across the party you would wish for. Yes it becomes a spoilt vote but what would be the reaction across all the central offices, if millions voted that way?
            May be the sticky and smelly might hit the fan big time and cause a big rethink on their so called save the world and man salvation policies.

  10. Narrow Shoulders
    April 24, 2021

    £300 billion of printed money into the economy. I look forward to that making it’s way to those who can afford to invest in assets and making the rest of us pay more for our housing and other costs of living.

    Good to see that much of it is not interest bearing having been printed by government.

    Why are we paying interest on any of it. Once printed it becomes inflationary, why compound that by paying interest?

    1. Narrow Shoulders
      April 24, 2021

      Money printed by government does not need to be repaid by the taxpayer too, many of whom received no benefit from the splurge. Universal credit does not pay out if you have savings, you are on your own until you are destitute.

      Printed money can be removed from the economy once demand picks up.

  11. Sea_Warrior
    April 24, 2021

    We’ve dropped another place on the Worldometers’ ranking on ‘Serious/critical cases’ – down to 49th, with tiny Oman moving above us. I wonder if this shows that our vaccination drive is proving even more effective than first hoped – and that the bounceback in general economic activity will be strong.

  12. Alan Jutson
    April 24, 2021

    Yes it is difficult to produce meaningful figures when so much has changed first one way, then another, but the added complication is our complex tax structure, and the confusing and stupid policies that surround it.

    The Government wants us all to save energy, but double glazing units and products are taxed with VAT, so are loft and wall insulation materials and services, also boiler controls, simple draught stripping etc etc. and so it goes on.
    It is often said they will tax the air we breathe next, but its already happening with all sorts of charges on emissions, congestion, etc etc.
    They want us to use expensive electricity for everything instead of fossil fuels, but rest assured they will tax electricity when they realise that tax revenue has gone down or completely disappeared in a few years time.

    Rather than pie in the sky guessing what will happen in the future, why not do the simple and factual calculation on what has happened in the past with regards to revenue income and base government policy on past factual information. Thats what most sensible businesses and households do.

  13. Derek Henry
    April 24, 2021

    Well said John,

    Thank you from the bottom of my heart.

    First thing Conservatives have to do is accept reality like they are starting to do in the US

    https://www.theamericanconservative.com

    Stop using the liability side of the balance sheet only and start using the asset side of the balance sheet.

    When they say the government budget deficit is £300 billion they forget to mention that means the non government sector surplus is £300. Households and business hold a £300 billion surplus.

    We can see that in real time in the data as savings soar during lockdown. Are being used to pay down private sector debt, loans and credit card debt.

    Who are the government borrowing from. ?

    Where did they get £’s from that the government are borrowing ?

    It’s obvious the MONOPOLY issuer of the £ is borrowing £’s from the private sector. They got those £’s from the MONOPOLY issuer of the £ in the first place when they previously deficit spent.

    It’s just an asset swap they swap £’s held by the private sector As a reserve balance at commercial banks for a government bond. That’s it.

    When they pay the debt off they swap the government bond for a reserve balance debt paid.

    Fiscal deficits put downward pressure on the overnight interest rate. Bond sales make sure the BOE can But their overnight interest rate. It is just a reserve drain to control interest rates.

    In other words, the UK government’s promise is only that a non-interest bearing reserve balance will be substituted for an interest bearing Treasury security. This is not a potential source of financial stress for the government. Which John has mentioned before it is not like private sector debt.

    To summarise:

    The BOE sets the short-term interest rate based on its policy aspirations. Operationally, fiscal deficits put downward pressure on interest rates contrary to the myths that appear in macroeconomic textbooks about crowding out. The central bank can counter this pressure by selling government bonds, which is equivalent to government borrowing from the public. A simple asset swap.

    The penalty for not borrowing is that the interest rate will fall to the bottom of the corridor prevailing in the country which may be zero if the central bank does not offer a return on reserves, For example, Japan has been able to maintain a zero interest rate policy for years with record fiscal deficits simply by spending more than it borrows.

    This also illustrates that government spending is independent of borrowing, with the latter best thought of as coming after spending.
    Government debt-issuance in the context of open-market operations is a monetary policy consideration rather than being intrinsic to fiscal policy.

    A fiscal surplus describes from an accounting perspective what the government had done not what it has received. Macroeconomic theory that construes the government budget constraint as an ex ante financial constraint is wrong. Instead of seeing it as an ex post accounting statement, with no operational relevance which it is.

    When you actually study the accounts between the central bank, commercial banks and HM Treasury. What you quickly realise is what is held out as a financial constraint is usually not that at all. Typically, in macroeconomic policy the constraints are political and voluntarily imposed. The sophists then dress these political constraints up as financial constraints using gold standard type/ Euro macroeconomic models which appear throughout the literature to avoid addressing the real issue. That don’t apply to us because we use sterling and are sovereign.

  14. Bryan Harris
    April 24, 2021

    It’s still an awful lot of borrowing, and if we can believe the rumours a great deal of that borrowed we spent unwisely or outside normal procedures.

    Test & Trace has a budget of £37Billion – Something that has produced no sound results – It’s made certain hi-tech companies a little richer, but lives saved are unknown, but pretty close to zero.
    To top it all ministers do not even know how much of that budget has been spent, but is estimated at £22Billion.

    The government is out of control, and not only with the way they throw money at problems, to make them go away as socialism dictates.

  15. William Long
    April 24, 2021

    It is surely no coincidence that The Office of Budgetary Responsibility (what a name!) was set up by the chief architect of Project Fear, and ultra pessimism is therefor in its DNA. Are we not entitled to expect that Chancellor of the Exchequer should be someone who is capable of taking responsibility for his own actions without seeking to shelve them onto another unelected, and unacountable quango?

  16. Richard1
    April 24, 2021

    Excellent article in the Telegraph by the professors of medicine at Harvard and Stanford universities, explaining the folly and irrelevance of lockdown and standing up for the distinguished prof Gupta, who has been much traduced, especially apparently by two shrill leftists, Paul mason of the new statesman and George monbiot of the guardian. How disgraceful that these leftists launch mendacious and misleading attacks on a distinguished academic on a subject on which they themselves have no knowledge or expertise.

    It’s always the same with shrill and virulent leftists. A good guide to forming opinions on topics is to see what they say and then think and vote the opposite.

  17. a-tracy
    April 24, 2021

    Who gets to hold the treasury experts to account with their 91bn mistake? Who gets to question them in the intensive panel meeting trials we sometimes see on the news to fully understand how they went so wrong? Do you and our other elected MPs get to see their full maths calculations John even if we don’t?

    Who gets to hold Housing Associations to account, especially those that promise to build new homes but actually reduce social housing by over a 1000 and instead of spending the promised £267m by now when they took over, it has only spent £100m?

    Who holds councils to account those who spend wildly and make mistakes with investments of rate payers money? When you live in a massive majority area – no-one.

    Absolutely no-one that matters cares. In a couple of weeks these same people that have asking workers/contractors to dash around in the last two weeks cutting grass and clearing verges and sweeping up a years worth of littering, after a year of inaction, will be wanting our votes for doing nothing and the good little flag wavers around here, all 300-400 of them will go and elect the same old crew yet again, all those that have stood aside watching money flow out and hundreds of new homes built on fields but nothing come back in, no benefits at all after 30 years of private housing growth. I offered to go on a standards committee once, a free voluntary role, I still feel the whiplash on my back following the ‘interview’. The forecasting isn’t worth the paper it is written on. Ask them to come forward and tell them what actually came to pass.

  18. acorn
    April 24, 2021

    What the UK Treasury lacks is the equivalent of the “US Treasury Daily Statement” (Google it). It is very difficult to bung millions of dollars to your wine merchant mate for PPE/ face masks without some federal agency investigating such payments. Frankly I can’t find a justification for the existence of the OBR. Such fiscal forecasting isn’t required for a Treasury that can issue its own monopoly currency without restriction any minute of the day.

    The DMO’s spare cash at 31 March 2021 is £18.3 billion, £17.8 billion higher than that projected at the November remit revision. Just 3.6% of the £483 billion of Gilts it sold in the Covid year. That was £327 billion more than it planned to sell in January 2020 before Covid.

    The Debt Management Report (DMR) 2021-22 includes the Office for Budget Responsibility’s revised forecasts for the Central Government Net Cash Requirement (excluding NRAM ltd (NRAM), Bradford & Bingley (B&B) and Network Rail (NR)) in 2020-21 and 2021-22 of £369.7 billion and £240.4 billion respectively. The new forecast for 2020-21 is £32.8 billion lower than the forecast published at the remit revision on 25 November 2020, whilst the forecast for 2021-22 is £63.8 billion higher .

  19. glen cullen
    April 24, 2021

    BBC – The government said ‘costs of wider refurbishment in this year have been met by the prime minister personally’
    This isn’t the response from an open and transparent government…this sounds like the response from Putin ref his new palace last year

  20. Barbara
    April 24, 2021

    Seen elsewhere – seems relevant to the simultaneous overtaxing of the public and the trashing of our economy:

    “It used to be said that if you could build a better mousetrap then the world would beat a path to your door.
    Now you don’t need to build a better one at all. You just get the European Union to regulate against all mousetraps except the crappy one that YOUR company makes and the public will have no choice but to buy them.
    If you own a company making ruinously expensive alternative energy systems that nobody in their right mind would ever use you just get a buffoon like Boris Johnson to impose carbon neutrality targets and overtax the population to further subsidise the whole scam.
    Eventually the people can’t afford to waste cheese on mousetraps anyway.”

  21. X-Tory
    April 24, 2021

    I have long believed (and yes, this is a serious proposal) that the government should make NO economic forecasts of any type. Think about it: when has the Treasury, or the OBR, ever been right with one of their GDP, or tax (or other) forecasts? Every year, at budget time, the Chancellor reels off all these predicted future GDP figures, and every subsequent year he has to amend them. It’s an embarrassing joke. But worse than that, the forecasts influence policy. And wrong forecasts (which they always are) will influence policy WRONGLY.

    The other problem with allowing erroneous economic forecasts to influence policy is that you subjugate your political beliefs to the false prophets of economic forecasting. I want a Chancellor who uses his GOOD JUDGEMENT to put his political beliefs into practice. If you believe that high corporation tax is counterproductive then you shouldn’t be forced into raising the rate just because some arrogant economist tells you you have to do so. So what is the alternative? Chancellors should follow their instincts and good judgement and adopt the policies they BELIEVE to be right. Then, the next year (or even six months later) they can see from the genuine, real-world figures, if they were right, and adjust their policies accordingly.

    This approach will separate those Chancellors with good judgement from those who are just the PM’s mate. And who can argue that that would not be a good thing? The likes of Sir John of this parish would thrive and we would all be better off.

    1. Alan Jutson
      April 24, 2021

      +1

    2. Derek Henry
      April 24, 2021

      The reason they are wrong when it comes to forecasting is that they never know how much households and businesses are going to save. It’s just a guess.

      If they spend £10 billion and collect £8 billion in tax they call that a £2billion government budget deficit. Which in reality is a £2 billion household and business surplus.

      Yes, spending comes first tax collection comes second. It is absurd to think it works the other way around and that they tax first and then spend.

      So they then Issue £2 billions worth of government bonds to balance the spending. An asset swap so the household and business surplus can earn more interest.

      They forecast how many bonds they are going to issue but always get it wrong. Because when they originally spent the £10 billion nobody knows how much of that £10 billion will be saved and not spent by households and business.

      Why do currency-issuing governments issue debt? – Part 1

      http://bilbo.economicoutlook.net/blog/?p=45106

      Why do currency-issuing governments issue debt? – Part 2

      http://bilbo.economicoutlook.net/blog/?p=45108

  22. kb
    April 24, 2021

    Surely this revision to the debt gives space to reverse the damaging five-year freeze on the income tax threshold?
    This freeze attacks the very people we want to get off benefits and back into work. Also very bad news for our poorer pensioners.
    The increased personal allowance was one of the few good thing that came out of the Coalition government.

    1. Narrow Shoulders
      April 24, 2021

      A whole £70 increase this year or £14 of our own money we are allowed to keep.

      NI threshold increase gave us another £6.

      That is one week of the extra that has been given to Universal Credit claimants

  23. No Longer Anonymous
    April 24, 2021

    Borrowing levels compared to what ? 2019 ???

    You do realise that China is now in party mode. That there is a shortage of portaloos because they have raves going on all over the country and that we couldn’t open up festival season even if we wanted to.

    If this vaccine doesn’t get us out of masks by summer then that will be everything that Boris has done is catastrophic. He has delivered socialism on speed.

    1. Philip P.
      April 24, 2021

      No longer Anon. – Yes indeed. They have a lot to celebrate in China. Western countries now going over to their social control ideology is as big a victory for them, as the old Soviet bloc abandoning communism was for the West in 1989. As Neil Ferguson said, it didn’t seem possible at first, then this country realised it was OK to go Chinese Communist. Lots to party about in Beijing!

  24. Iain Gill
    April 24, 2021

    Cops out of control again in London today, biased policing there for all to see…

    Thank goodness we dont need to rely on main stream media to see first hand what is happening

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