"But actually the real surprise was that the government's financial position is nowhere near as bad as had been suggested in the run-up. I had warned in a few live appearances not to take at full face value the protestations about how dire the OBR forecast had been. There are always a lot of moving parts when you project long term."
"Yes the economy is forecast to grow more slowly than expected because long-term productivity has been downgraded, but it also starts from a better base thanks to outperformance and upgrades this year. On top of that, higher wages due to high inflation have boosted the Treasury's tax take. Very interestingly, the OBR has also made a judgement that Artificial Intelligence (AI) could boost productivity by a notable and growing amount by the end of the year."
"So why did she do way more than expected? By freezing thresholds for a further three years until 2031, she is dragging most people into paying more tax including pulling almost one in four people into the higher rate tax bracket. If it wasn't for her U-turn on welfare reforms, she would have been on track to actually meet her target by a whisker before she made any changes to tax and spending."
An independent forecaster, the Office for Budget Responsibility, accidentally published its forecast early. The government's fiscal position is significantly better than earlier warnings because of outperformance and upgrades this year, higher wages from past inflation boosting tax receipts, and an OBR judgement that AI could raise productivity by the end of the decade. Despite a downgraded long-term productivity outlook, starting GDP and tax receipts are stronger. The Chancellor froze income tax thresholds until 2031, pulling many into higher rates and increasing revenues. Without a welfare U-turn, borrowing targets would nearly have been met. The Budget pairs near-term borrowing to fund priorities with later tax rises to reduce debt.
Read at www.bbc.com
Unable to calculate read time
Collection
[
|
...
]