Tax | Statutory Audit | Accounting
The growth of tax receipts and lower than expected debt interest have reduced the budget deficit faster than the OBR expected in October 2018 at the time of the autumn Budget. Government remains on course to bring the structural budget deficit to below 2% of GDP by 2020-21, with some improved headroom.
Government spends fiscal windfall.
Larger than expected tax receipts by the OBR and improving UK employment have lead to a fiscal windfall since March, sufficient to deliver a balanced budget by 2025, yet this was absorbed by Mrs May's declaration of increased funding for NHS.
The stronger than expected world economy in the last four months meant the OBR revised up their GDP forecast in the near term,
but further into the future the projections remain unchanged.
Lower borrowing was noted but 'headroom' against the Government’s fiscal targets is virtually unchanged from autumn 2017.
The OBR revised down their productivity and GDP forecasts and, despite lower borrowing this year, increased the forecast for the budget deficit.
The Chancellor increased the prospects of a higher future deficit with higher public spending and a net tax giveaway.
The deficit is likely to be considerably lower this year than the OBR anticipated last November owing to one-off factors and timing effects.
The OBR believe the Chancellor remains on course to meet Government targets for structural borrowing and net debt, but not balance the public finances “at the earliest possible date in the next Parliament”.