UK chancellor George Osborne has announced new budgetary rules that aim to eliminate the current structural deficit within three years and ensure public sector net debt is falling as a share of national income by 2016-17.
Key to the new vision is a budget surplus by 2017-18.
But as the FT’s Martin Wolf warns on Friday:
…the focus on public debt alone is mistaken. Crucially, it ignores the asset side of the balance sheet altogether. Moreover, other things being equal, the bigger the fiscal surplus, the lower interest rates would be. If that encouraged a run-up of private debt, the economy might end up yet more unstable. Alas, the Office for Budget Responsibility already forecasts a big jump in household debt.
Creakier than sovereigns’ long-term pensions liabilities? Sub-sovereign ones, possibly.
A new piece by Moody’s lands, looking at the problem among the regions and cities of four countries otherwise rated Triple-A: Australia, Canada, Germany and the United States. Read more
So what did the Chancellor actually do today to change macro-economic strategy in the UK Budget?
In one important sense, he seems to have done little or nothing. The path for the structural budget deficit has been left almost exactly the same as it was after the 2010 Budget. Therefore, the big strategic decision taken last year, which was to tighten fiscal policy by about 6 per cent of GDP over the current Parliament, has remained intact. This was the key element of Plan A, and it does not seem to have been changed. Read more
Well, this took a while.
From the Office for National Statistics and with a H/T to Ian Fraser: Read more
Germany has warned that a failure to reduce public debts could trigger another worldwide economic crisis, saying that its planned cuts in spending will not endanger global growth, reports the FT. Speaking less than a week before the Group of 20 leaders meet in Toronto, Angela Merkel, Germany’s chancellor, said Berlin’s stimulus programmes would be withdrawn at a responsible pace.
Got a spare 10 minutes? Some technical expertise? Experience in handling large volumes of data?
Then you might be able to get some use from the just-released UK Coins data. That’s the Combined On-line Information System, used by the Treasury to collect financial data from the public sector. Read more
Now you too can help support the Greek economy.
The National Bank of Greece — which is not, by the way, the central bank of the Hellenic Republic — is encouraging visitors to its website to “deposit money into the ‘Solidarity Account’ for the nation’s public debt”. Read more
Up, up and away: European commercial mid to long-term government borrowing is likely to hit a historic €1,446bn in 2010, rating agency Standard & Poor’s said in a note on Thursday.
That’s a €52bn jump from 2009’s peak, according to the rating agency’s European sovereign issuance survey. Read more
Sean Corrigan of Diapason Securities brings us the following chart:
The clue is in the acronym (it’s a duo).