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Office for Budget Responsibility

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6 Jul, 5 tweets, 3 min read

The Government’s elevated debt stock is both a product of past fiscal risks and a source of future risks to the public finances. Two-thirds of the 80% of GDP increase in debt since 2000 happened in the wake of the 2008 financial crisis and 2020 pandemic.

Despite the stock of debt reaching its highest level since the early 1960s, the cost of servicing that debt remains near historical lows thanks to falling interest rates.

#OBRfiscalrisks

But there are no guarantees that interest rates will remain low, so in Chapter 4, we test the impact of different factors that could push up government borrowing costs.

#OBRfiscalrisks

obr.uk/frr/fiscal-ris…

The scenarios illustrate the greater sensitivity of public debt to future changes in its cost since pre-financial crisis, as a result of both the almost trebling in the stock of debt as well as the shortening of the effective maturity of that debt.

Read more in Chapter 4 of the #OBRfiscalrisks report 📗

obr.uk/frr/fiscal-ris…

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Office for Budget Responsibility

@OBR_UK

6 Jul

The global economic downturn brought about by the pandemic has been the worst since the Great Depression of the 1930s. World GDP fell by 3.3% and almost 90% of economies experienced a decline in output in 2020.

#OBRfiscalrisks

The UK experienced one of the deepest recessions among advanced economies, with output falling almost 10% in 2020. This was due to being relatively hard hit by the virus, spending more time under stricter restrictions, and our large share of social consumption in output.

However, the economy also proved to be surprisingly adaptable and resilient as the pandemic unfolded, with each successive lockdown taking less off output.

#OBRfiscalrisks

Read 9 tweets

Office for Budget Responsibility

@OBR_UK

6 Jul

What risks does #climatechange pose for government finances? 🌍

OBR Economists Rachel and Tom explain some of the risks we’ve considered in chapter 3 of our 2021 #OBRfiscalrisks report 📗

Read more: obr.uk/frr/fiscal-ris…

The Government has committed to achieving net zero by 2050. Since 1990, the UK has cut its CO2 emissions by 243 million tonnes, more than any other G7 economy and faster than the EU average.

#OBRfiscalrisks

But the UK will need to cut emissions by another 365 million tonnes over the next 30 years to reach net zero emissions by 2050. The reductions will need to come mainly from decarbonising power, industry, buildings, and transport.

#OBRfiscalrisks

Read 10 tweets

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