Yesterday, what was left of the government’s deficit reduction plan moved even further into the realms of fantasy.
In its latest Economic and fiscal outlook, the Office for Budget Responsibility reduced its forecast for tax receipts over the rest of the decade.
[T]his year has seen a sharp fall in the amount of tax raised for every pound of measured economic activity. As a result, despite strong economic growth, the budget deficit is expected to fall by only £6.3 billion this year to £91.3 billion, around half the decline we expected in March. That would be the second smallest year-on-year reduction since its peak in 2009-10, despite this being the strongest year for GDP growth.
[O]ur forecast for public sector current receipts is lower across the forecast period compared with March. Receipts are £7.0 billion lower in 2014-15 and £25.1 billion lower in 2018-19.
The key reasons for…
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