Wednesday, December 10, 2003
Bucketloads of borrowing revisited
Posted by David Smith at 06:39 PM
Category: Thoughts and responses

Gordon Brown has duly delivered his pre-budget report - one of the two big events in the UK economics calendar. The surprise was the extent of the additional borrowing, with this year's deficit revised up from 27 billion to 37 billion and next year's from 24 billion to 31 billion.

Brown's justifications were (a) that his fiscal rules will still be met over the medium-term and (b) that everybody is doing it. Thus, this year's UK deficit of 3.3% of GDP (on the Maastricht definition), compares with 4.2% for France and Germany, 7.4% for Japan and 4.9% for America. Next year, the figures are 2.6% for the UK, 3.8% France, 3.9% Germany, 6.8% Japan and 5.1% for the USA.

Actually, not everybody is doing it. Canada's budget deficit is 1% of GDP this year, falling to 0.7% next. Italy, once considered a public finance disaster waiting to happen, has deficits remaining below 3% of GDP. And even if everybody was doing it, several wrongs don't make a right.


What policies aside would you advocate? Changes in spending? Changes in taxes?

Posted by: Gary Bezowsky at December 11, 2003 07:54 AM