The Office for Budget Responsibility’s “Fiscal risks and sustainability report" showed that if left unchecked the public debt to GDP ratio would spiral from 98% now to 274% by the mid-2070s. But there is a pathway out of this fiscal mess that doesn’t involve a fundamental reassessment of what the state does or an exponential rise in the tax burden, namely boosting GDP growth. We think the Chancellor will demonstrate her fiscal prudence in the Budget by raising day-to-day spending by £16bn a year and taxes by £16bn a year to pay for it. But she would be wise to lay the foundations for long-term economic growth by raising public investment too.
We will be discussing the outlook for the Bank, ECB and Fed policy in a 20-minute online briefing at 3pm BST on Thursday 19th September. (Register here.)
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