KPMG comments on today’s public sector finances data

“Debt reduction this year remains a long shot” says Michal Stelmach, senior economist at KPMG UK.

“Debt reduction this year remains a long shot” says Michal Stelmach, senior economist

“The pace of deficit reduction is set to slow over the coming months, with the government’s latest package of cost of living measures providing a net fiscal loosening worth 0.4 percent of GDP in 2022-23. We expect borrowing to overshoot the OBR’s March forecast by around £20 billion this year, largely on account of higher spending and weaker economic growth.

“The debt profile will depend on the economic outlook which faces acute downside risks in the near term, while rising demand for healthcare coupled with falling working-age participation could also impede fiscal sustainability. We now expect public sector debt to peak in 2023-24, missing the OBR’s March forecast by two years.

“Public sector net borrowing was £35.9 billion in the first two months of 2022-23, down by 15 percent from the equivalent period last year. There remains significant uncertainty around these early estimates as around 60 percent of receipts outturns are based on a forecast at this stage.”




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