IFS Green Budget 2014https://www.nuffieldfoundation.org/sites/default/files/files/IFS%20Green%20Bud

As the government continues to have to contend with the consequences of the Great Recession for the public finances and household incomes, the issues discussed in this year’s Green Budget include: • The planned fiscal consolidation and risks to the outlook for government borrowing • The outlook for the global economy and the UK economy • Policies aimed at stimulating the housing market and boostin. [...] Public sector net debt would have increased markedly year-on-year, likely surpassing 100% of national income before the end of the current decade, and 200% within the next two decades.3 The extent of the permanent damage done to the public finances (and therefore the hole to be filled) depends on the extent of the permanent reduction in UK national income due to the financial crisis. [...] As it is the latter that is relevant for the underlying state of the public finances, the estimated size of the permanent hole in the public finances is largely unchanged since the 2013 Budget, as is (therefore) the size of the fiscal consolidation required to deal with it. [...] Figure 1.3 also illustrates how the size of the planned fiscal consolidation has changed since the 2008 Budget, with the bar furthest to the right showing the latest estimate of the size of the problem and the response planned under current policies. [...] It is possible to quantify the potential impact of different output gap estimates on the level of borrowing – specifically, on the decomposition between structural and cyclical borrowing – and, therefore, on the size of the policy response required to deal with the hit to the public finances from the financial crisis.3 Table 2.1 illustrates the impact of 1 This is largely on the basis of official.