BCC comments on public sector finances
22nd November 2016
Commenting on the public sector finances for October 2016, published today by the ONS, Suren Thiru, Head of Economics at the British Chambers of Commerce (BCC), said: -While some encouragement can be taken from the fall in borrowing in October, the UK's public finances are still likely to overshoot the government's deficit target for this financial year.
We also expect the OBR's updated forecasts will confirm our view that the UK's fiscal outlook has deteriorated significantly since the March budget. -The size of the UK's budget deficit may limit the scope for growth boosting measures in the Autumn Statement, and the chancellor faces a major fiscal headache over the next few years, with slower than expected growth likely to further restrict the UK's ability to generate sufficient tax revenue and achieve a substantial reduction in the deficit. -It is therefore essential that the chancellor's new fiscal plan is flexible enough to adapt to changing economic conditions. The government must make a distinction between borrowing to cover the deficit and borrowing to invest, particularly in infrastructure, which will boost the economy's tax generating potential in the long-term.