On a v big day for fiscal policy...
OBR has just pulled its planned update to March forecasts that would have shown for various technical reasons a considerably higher level of borrowing.
Cabinet Secretary ruled “not consistent” with election purdah - an hour before publication
OBR has just pulled its planned update to March forecasts that would have shown for various technical reasons a considerably higher level of borrowing.
Cabinet Secretary ruled “not consistent” with election purdah - an hour before publication
So if you are looking for an idea of what those numbers might have looked like - you’re in luck - @theIFS helped us with the Budget that didn’t happen yesterday. Though these numbers also include Spending Review boost, and weaker growth forecast... #bbcnewsten
Chancellor Sajid Javid talking about a new consensus on extra public investment spending taking advantage of historically low interest rates “incredibly, negative interest rates” for a “decade of renewal”/// new rules...
NEW: Chancellor announces a 3% public investment limit - still tens of billions more in public investment..
Thats about £20 billion a year more over Parliament.
Implication of McDonnell’s announcements overnight was around 4%.
Debt will still fall he says.
New era, New rules.
Thats about £20 billion a year more over Parliament.
Implication of McDonnell’s announcements overnight was around 4%.
Debt will still fall he says.
New era, New rules.
The new Conservative fiscal rules - current average forecast Public sector net investment is 2.1% - 3% average is a limit, but provides space for about £100bn extra investment than planned over the Parliament.. 
The key dividing line
Chancellor says 10s of billions more in much needed investment, & rules will change, says this is still consistent with national debt still falling eventually.
Shadow Chancellor -100s of billions needed, & rules will change more radically, debt set to rise
Chancellor says 10s of billions more in much needed investment, & rules will change, says this is still consistent with national debt still falling eventually.
Shadow Chancellor -100s of billions needed, & rules will change more radically, debt set to rise
*** To be clear - the falling debt rule is gone, as I previewed on the news at Ten yesterday instead “keep debt in check”
What Chancellor said is it should be lower at end of Parliament... that arises, I think, mainly out of statistical quirk around BoE asset purchases...
What Chancellor said is it should be lower at end of Parliament... that arises, I think, mainly out of statistical quirk around BoE asset purchases...
SO...
Chancellor now no longer has a formal fiscal target that the national debt should be falling (as a proportion of te economy)...
And nor will the Shadow Chancellor at the end of this speech in Liverpool...
Significant change to fiscal policy either way.
Chancellor now no longer has a formal fiscal target that the national debt should be falling (as a proportion of te economy)...
And nor will the Shadow Chancellor at the end of this speech in Liverpool...
Significant change to fiscal policy either way.
NEW: Shadow Chancellor - announces Labour will target “public sector net worth” not debt... taking account of public sector assets as well as liabilities...
Major shift.
Says it is “common sense”.
Major shift.
Says it is “common sense”.
Clearly it allows hundreds of billions more in borrowing than a falling debt rule. It helps with accounting for nationalisations. And least against off balance sheet trickery such as PFI.
Definitely radical. But much talked about in macroeconomic circles too...
Definitely radical. But much talked about in macroeconomic circles too...
Here’s the report from @resfoundation that I understand has influenced thinking...
resolutionfoundation.org/app/uploads/20…
resolutionfoundation.org/app/uploads/20…
Mcdonnell tells me that the Chancellor has promised a “miserable” amount of extra investment with his fiscal policy changes, set against the “social” and “climate” emergency.
Though didnt answer my question about how such large borrowings would up the low rates he is relying on
Though didnt answer my question about how such large borrowings would up the low rates he is relying on
