We take a look at the state of the public finances, and the implications for the economy and businesses.
The Chancellor ended the 2022/23 financial year with net borrowing £15 billion lower than expected in the Office for Budget Responsibility forecast. This leaves the Treasury with additional breathing space to meet their fiscal rules after the expansionary fiscal policies announced at the Spring Budget, but the debt burden will remain a persistent issue over the medium term.
The OBR released their Economic and Fiscal Outlook alongside the Spring Budget in March of this year. This release forecasts output, inflation, and public sector finances to the 2027/28 financial year (FY). In terms of public sector finances, the OBR forecasts a worsening in the short-term before significant improvements are made with cumulative public sector net borrowing to reach £132 billion this FY before falling to £49 billion in 2027.
Public sector debt is also predicted to follow a similar pattern, peaking at 103.1% this FY before steadily falling to 96.9% by 2027/28. However, despite the large fis
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