KPMG comments on today’s public sector finances data

“Longer-term fiscal headwinds will likely erode any short-term windfall” says Michal Stelmach, senior economist at KPMG UK.

“Longer-term fiscal headwinds will likely erode any short-term windfall”

“The UK public finances remain vulnerable to fragile economic outlook and tighter financing conditions. The upcoming Autumn Statement could see new spending pledges to address more immediate demands, such as safety concerns around school buildings or local authority deficits. State pensions could potentially rise by £10 billion next year under the triple-lock guarantee, leaving less money for the Government to finance critical investment projects.

“Longer-term headwinds remain, leaving uncertainty around the fiscal outlook beyond the next election. That will leave the Government facing a trade-off between higher taxes or lower spending, neither being a popular option.

“Public sector net borrowing was £11.6 billion in August, up from £8.1 billion last year. On a year-to-date basis, that was £11.3 billion lower than the OBR predicted in March. We expect public sector net borrowing to reach around £120 billion in 2023-24. This would be the lowest level since 2019-20, although it would still amount to 4.6% of GDP, compared to the Government’s medium-term target of 3% according to the current fiscal rules.”



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Notes to Editors:     


KPMG LLP, a UK limited liability partnership, operates from 20 offices across the UK with approximately 17,000 partners and staff. The UK firm recorded a revenue of £2.72 billion in the year ended 30 September 2022.  

KPMG is a global organisation of independent professional services firms providing Audit, Legal, Tax and Advisory services. It operates in 143 countries and territories with more than 265,000 partners and employees working in member firms around the world. Each KPMG firm is a legally distinct and separate entity and describes itself as such. KPMG International Limited is a private English company limited by guarantee. KPMG International Limited and its related entities do not provide services to clients. 

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