Osborne set to meet debt target

18 Mar 15

Debt as a proportion of national income is to start falling, allowing Chancellor George Osborne to meet the fiscal target he set five years ago, he said today.

In his Budget statement, Osborne revealed Office for Budget Responsibility figures predicting that debt as a share of GDP will fall from 80.4% in 2014/15 to 80.2% in 2015/16. It would then continue to fall, reaching 71.6% in 2019/20.

This puts an ended to a 13-year increase in the national debt, the longest since the seventeenth century, the chancellor said.

‘For much the last five years it looked like we might fall short [but] the hard work and sacrifice of the British people has paid off. The original debt target I set out in my first Budget has been met. We will end this Parliament with Britain’s national debt share falling.

‘The sun is starting to shine – and we are fixing the roof.’

On economic growth, Osborne said the OBR had confirmed that growth hit 2.6% last year, the fastest rate of any of the world’s advanced economies.

It has also revised up its growth prediction for 2015 to 2.5% from the 2.4% forecast at December’s Autumn Statement. Next year’s forecast has also been revised up to 2.3% where it will remain for the subsequent two years.

In terms of the deficit, the OBR said its latest forecast suggests that by 2014/15, the deficit would have been reduced by 41% in cash terms and by 51% as a proportion of GDP.

The deficit is projected to continue falling and turn into a small surplus by 2018/19 and the following year.

‘The deficit falls to 4% in 2015/16; then down to 2% the following year; and down again to 0.6% the year after that,’ Osborne said.

‘In 2018/19, Britain will have a budget surplus of 0.3% in 2019/20. We will also comfortably meet out fiscal mandate and Britain will be running a surplus for the first time in 18 years.’

The projected surplus is expected to be £5.2bn in 2018/19, rising to £7bn in 2019/20.

Osborne was also upbeat about today’s employment figures, calling it a ‘massive moment’.

‘Britain has the highest rate of employment in its history,’ he told MPs.

‘For years governments have talked about full employment – the government is moving towards achieving it… The evidence is plain to see – Britain is working.’
 

  • Vivienne Russell

    Vivienne Russell is managing editor of Public Finance magazine and publicfinance.co.uk

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