The true hole in UK public finances

Article Abstract:

Forecasts for the UK budget deficit are difficult to make, both in the short term and in the long term. A public sector deficit means that saving is being carried out in the private sector. This was true for UK individuals in 1996. Savings may continue to be high die to job insecurity, a weak housing market and other factors. Private savings are forecast to fall, however, which should reduce the budget deficit. Too much saving in the economy will lead to a persistent budget deficit. Reductions in spending or increases in taxation may lead to lower investment levels or high private savings levels, and this would not address the problem.

Analysis, Budget deficits

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Mr Brown squirms, gilts relax

Article Abstract:

The United Kingdom chancellor, Gordon Brown, will announce that government borrowing forecasts have been revised upwards, since economic growth will be less in 1999 than previous forecasts. Yields for government securities (gilts) can drop when borrowing is high. The long-term outlook is the key issue, and there is optimism for the long term. Government borrowing has dropped in 1998 compared with 1997, and there may be a larger budget surplus in 1998 than forecast. There is still a danger of error for long-term forecasts, but prospects for government finances appear positive.

Government Bonds, Government securities

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The price of Mr Brown's prudence

Article Abstract:

The United Kingdom government could achieve a budget surplus of 3 billion pounds sterling for 1999-2000, rather than the deficit of 4.5 billion pounds that was forecast, according to Barclays Capital's Kevin Adams. This could lead to a drop in yields for government securities, which may help stock prices. The surplus implies that the private sector is in deficit, as personal savings have dropped and companies have borrowed more to invest. Net borrowing for the United Kingdom private sector is still lower than it was during 1988-1989.

Stock-exchange, Stock exchanges

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