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Budget Consolidation Options for the UK

Published online by Cambridge University Press:  26 March 2020

Ray Barrell
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Extract

The increase in UK public sector net borrowing in the past year, plotted in figure 1, has been in part a result of the decline in economic activity, and also a consequence of the change in housing and financial market transactions. The former is predictable with every 1 per cent decline in output below trend producing a decline in net revenues of of between one third and three fifths of a per cent of GDP depending upon the reason for the decline in output. The loss from the decline in asset-related revenues is harder to judge, but the April 2009 budget suggested that revenue losses might be more than 1 per cent of GDP.

Type
Articles
Information
National Institute Economic Review , Volume 210 , October 2009 , pp. 58 - 60
Copyright
Copyright © 2009 National Institute of Economic and Social Research

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References

Barrell, R., Hurst, I. and Kirby, S. (2009), ‘How to pay for the crisis or macroeconomic implications of pension reform’, NIESR Discussion paper no. 333.Google Scholar
Barrell, R., Hurst, A.I. and Mitchell, J. (2007), ‘Uncertainty bounds for cyclically adjusted budget balances’, in Larch, M. and Martins, L.N. (eds), Fiscal Indicators, Brussels, European Commission, pp. 187–206.Google Scholar
Barrell, R. and Weale, M.R. (2009), ‘Fiscal policy, fairness between generations and national saving’, Oxford Review of Economic Policy (forthcoming).CrossRefGoogle Scholar