A slightly delayed Chart of the Week from ICAEW follows from this week's budget.
The chart shows how various factors have combined to turn George Osborne's July 2015 forecast of a £10bn surplus by 2019-20 into a £35bn deficit for Philip Hammond. In many ways, the change in the forecasts for 2019-20 tells the underlying story of this Budget.
The economy was already showing signs of weakness that had already taken away the prospects for a budget surplus, even before the Office for Budget Responsibility revised their figures down by a further £9bn. The chart also shows how much of the additional spending announced in the Budget has been focused into this particular year, perhaps with a view to providing a small fiscal stimulus in the first year following Brexit?
With the Office for Budget Responsibility concluding that it is unlikely that the government will be able to eliminate the Budget until well into the 2020s, this Budget was always going to be difficult. And although it is positive that there has been an improvement in the forecast for the deficit in the current financial year, the overall picture going forward is another timely reminder of the importance of investment to improve productivity and economic growth.