Autumn Statement: Zero borrowing forecast for 2018-19

Chart showing borrowing forecasts

The independent Office for Budget Responsibility (OBR) has forecast that, under the government's current plans, there will be no borrowing in 2018-19.

The prediction of "a small surplus" was announced at the start of Chancellor George Osborne's Autumn Statement.

The OBR also raised its forecast for growth in the UK economy.

The forecast for this year has gone up to 1.4% from the 0.6% it predicted in March. Next year's growth is now expected at 2.4%, up from 1.8%.

The raised forecasts bring the OBR into line with other forecasters. The average independent forecast is also 1.4% for this year and 2.4% for 2014.

Chart showing growth forecasts

Download the documents

Autumn statement logo

PDF download Full Autumn Statement documents[2.33MB]

Most computers will open PDF documents automatically, but you may need Adobe Reader

But while the forecasts for economic growth this year and next year have risen, the predictions for the following three years have all fallen slightly.

The chancellor said at the Conservative Party conference in September that he would balance the budget by the end of the next parliament if the Conservatives got back into office. The new forecasts suggest he could do that a year earlier than promised.

He also told the conference that he could run the government at a surplus without raising taxes, which analysts have said would mean making extensive spending cuts after the next general election.

Analysis

For George Osborne this was always going to be the most enjoyable set piece occasion since he became chancellor in May 2010.

Key indicators have moved in his favour and the outlook is much brighter than at the time of the Budget in March, when a triple dip recession seemed on the cards.

The key fact that he could trumpet in the Commons was that there will be no new annual borrowing in 2018-19 - in fact there will be a small surplus.

His party conference pledge to balance the books by the end of the next parliament will be achieved a year earlier than expected, according to the OBR's forecast.

But recording a small surplus will not wipe out the historic stock of government debt - still at nearly 80% of economic output in 2017-18.

The structural deficit, which is what's left after the effects of economic recovery are accounted for, will not fall any more rapidly than previously predicted.

Unveiling the Autumn Statement, he told the House of Commons: "Britain's economic plan is working, but the job is not done." He promised, "a government that lives within its means".

The last time the government ran an absolute budget surplus - meaning that it generated more in revenues, including tax yields, than it spent - was in 2001.

The OBR predicted government borrowing of £111bn this year, which is down from the £120bn that it had forecast in March, but not as big a fall as had been expected.

It is also considerably above the borrowing of £60bn that the government was expecting when it came to power in 2010.

In its own report, the OBR said: "We do not expect the quarterly growth rates seen during 2013 to be sustained in 2014. While consumer confidence, credit conditions and the housing market have improved, productivity and real earnings growth have remained weak."

Its documents show that the "small surplus" it is predicting for 2018-19 is £2.2bn.

It predicts that government spending will fall from 21.8% of the output of the economy in 2012 to 16.1% in 2018-19, which is the lowest proportion since records began in 1948.

More on This Story

Autumn Statement 2013

The BBC is not responsible for the content of external Internet sites

More Business stories

RSS

BBC Business Live

  1.  
    BUSINESS LENDING 06:22: Radio 5 live

    Wake Up to Money looks forward to later this morning when the Bank of England will give us an update on its Funding for Lending scheme - introduced two years ago to encourage banks to lend to small businesses. It's not been a rip-roaring success: a previous report said, despite all that help, the amount of money being lent was down £2.7bn over the first three months of this year.

     
  2.  
    QANTAS 06:12:
    A Qantas Airline plane gets takes off at Sydney Airport in Sydney on August 28, 2014

    Overnight Australia's national airline Qantas reported a huge loss of A$2.8bn for the past year - its biggest ever. That was partly due to writing down the value of its planes by A$2.6bn. Qantas added weak domestic demand, poor consumer spending and rising fuel costs also contributed. Chief executive Alan Joyce tried to put some gloss on the figures: "There is no doubt today's numbers are confronting... but they represent the year that is past".

     
  3.  
    SCOTTISH INDEPENDENCE 06:03:
    Saltire

    Pro-independence business people in Scotland have hit back. 200 of them have signed a letter, appearing in the Herald online, saying that the business case for independence "has been made - and it's strong and ambitious". They add: "The real threat to Scotland is the real possibility of a British exit from the European common market".

     
  4.  
    Rebecca Marston Business reporter, BBC News

    The monitor has been fitted and off we go. You can plug in to us bizlive@bbc.co.uk or @bbcbusiness. Here until 13:00.

     
  5.  
    06:00: Ian Pollock Business reporter, BBC News

    Good morning, the Business Live page will have its finger on the business pulse, just for you.

     

Features

From BBC Capital

Programmes

  • Going through ice across the Northwest PassageThe Travel Show Watch

    Navigating the treacherous Northwest Passage through ice and Arctic storms

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.