UK Budget: excessive stress after supply smash
- The OBR made surprisingly sharp downward revisions to its productivity growth assessment that reduced the government’s room for manoeuvre. Fudging to fit the BoE’s policy stance may be yielding an unduly dismal demand outlook.- Policy changes left a little fiscal headroom. There was a welcome focus on “the vision thing†with money for Brexit planning and housing policies, including new garden towns. Tax changes were modest and present negligible forecast news.
- There was little change to the current financing requirement. Borrowing forecasts further out were much higher, but the risks here now appear skewed to lower borrowing, provided that Brexit is not delivered in a disorderly shock.
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