Today’s public finances figures show net borrowing roughly on track to reach the Budget forecast for the deficit in 2010-11, as the chart shows.
This should be good news as persistent slippage on the public finances has stopped and the very early evidence shows the consolidation is roughly on track.
But because of the dotty way the Treasury and Office for Budget Responsibility have looked at the public finances in the past, this is not good enough. In fact, on plausible assumptions, we need another £5bn of tax rises or spending cuts a year to meet the fiscal mandate of eliminating the current “structural” budget deficit within five years.
Why is good news actually bad in the weird world of government forecasting?
In a nutshell because Read more