Today’s fiscal update was a damp squib as the Treasurer didn’t present fiscal forecasts beyond June 2021 and didn’t unveil fresh fiscal support. While the government’s current forecasts are very close to our own, policymakers will probably unveil additional measures in the budget due on 6th October. As such, the deficit in 2020/21 may be even larger than our forecast of 9% of GDP. However, the shortfall should shrink over coming years and we don’t expect the surge in public debt to cause major problems.
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