UK Macroeconomic Framework and PBR 2001

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UK Macroeconomic Framework and PBR 2001

• Gus ODonnell
• Managing Director, HM Treasury
• And Head of the Government Economic Service

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G3 GDP growth
change on a year earlier
Forecast
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UK Export Market Growth
Inflation Report figures are for world imports
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Output Gap
Per cent of GDP non-oil basis
Latest
Budget
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Key Risks

• Growth Inflation
• Prolonged US recession
• Private sector debt problems
• Sharper retrenchment in UK consumption/investment

• Growth Inflation
• New economy boosts UK productivity
• Inflation pressures subdued

• Growth Inflation
• Policy makers overcook demand
• Stronger consumer and company spending
• Asset prices rise

• Growth Inflation
• Productivity growth remains lacklustre
• Oil price hike
• Rise in wage pressures

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Fiscal rules

• Golden rule
• Over the economic cycle, the Government will
  borrow only to invest and not to fund current
  spending
• Sustainable investment rule
• Net public sector debt as a proportion of GDP
  will be held over the economic cycle at a stable
  and prudent level

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Changes to receipts since Budget
billion
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