Fiscal consolidation is harder than it looks.
Today’s Budget shows no improvement in the operating budget deficit - including on a structural basis - until 2027-28 which then relies on sharply lower government spending. The accuracy of recent Budget forecasts for operating expenses past the near-term has been relatively poor.
The structural operating budget deficit is still expected to be 1.5-1.6% of GDP in the current fiscal year and 2026-27.
