14 August 2013
Published 14 August 2013
Yesterday's Pre-election Economic and Fiscal Outlook (PEFO) statement should be renamed the piffle statement: it is a triumph of hope over experience, guesses over reality.
Despite the fact that both parties are promising to increase spending and to not cut anywhere - beyond relatively minor "efficiency dividends" from the public service - and to not increase taxes, but instead to cut them, Treasury is forecasting that spending growth will drop suddenly from 8 per cent a year to less than 4 per cent from now on, and that revenue growth will increase from 4 per cent a year to 6.5 per cent.
It is pure fantasy and virtually guarantees that the budget will remain in deficit.