LONDON (Reuters) – Prime Minister Boris Johnson’s government has made billions of pounds of new spending commitments in its first three weeks in office, even before the potential costs of a disruptive, no-deal Brexit are taken into account.
Chancellor Sajid Javid vistis the National Grid Training Centre near Newark, Britain August 9, 2019. Joe Giddens/Pool via REUTERS
New Finance Minister Sajid Javid will give more details of the plans next month, before a full annual budget later in the year – assuming that a no-confidence vote and an election do not intervene before then.
Following is a summary of where the public finances may be heading.
HOW ARE BRITAIN’S PUBLIC FINANCES NOW?
Britain’s government borrowed 23.5 billion pounds in the year to March 2019, equivalent to 1.1% of annual economic output and the lowest since the 2001/02 financial year.
This is down sharply from a peak of 9.9% of GDP in 2009/10, when the financial crisis triggered a slump in tax revenues and greater spending on some social benefits.
Public debt – the total amount of outstanding borrowing – has fallen much more slowly as a share of GDP and is still more than double its level before the financial crisis at 83% of GDP, excluding borrowing by state-owned Royal Bank of Scotland.
Britain is not alone in struggling to reduce debt against a backdrop of lacklustre growth since the financial crisis, with Germany the only big advanced economy to have a lower debt-to-GDP ratio.
WHAT HAS BORIS JOHNSON’S GOVERNMENT PLANNED?
Johnson declined during his leadership campaign to back the government’s existing fiscal rules, which aim to keep the deficit below 2% of GDP during normal economic times, and ensure debt falls as a share of GDP.