Magazine article Public Finance

IFS Head Queries 'Precision' of Latest Budget Deficit Estimate

Magazine article Public Finance

IFS Head Queries 'Precision' of Latest Budget Deficit Estimate

Article excerpt

The government's estimate of the structural budget deficit is of 'spurious precision', according to the director of the Institute for Fiscal Studies.

Robert Chote questioned the current figure - £86bn, or 5.8% of gross domestic product - at CIPFA's Facing the Cuts conference on September 8.

He said the fiscal consolidation plans outlined in June's Budget could be redrawn, and the Treasury and Office for Budget Responsibility could 'end up taking a different view of the size of the hole in the public finances'.

He said: The 0.8% [of the 5.8% figure] indicates a spurious precision. We really don't know how big that hole is because we don't know what "normal" will look like in the economy in future.

'Since the autumn of 2008, the Treasury has on a number of occasions changed its mind about how big this hole is. …

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