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Fiscal Policy Revision: Focus on UK Government Debt

Geoff Riley

26th March 2016

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The government issues debt to help finance a fiscal (budget) deficit. The budget deficit is the annual amount the government has to borrow to meet the shortfall between current receipts (tax) and total government spending (G). George Osborne has two fiscal policy targets built into legislation:

  1. For the budget to be in surplus from 2019-20
  2. For government debt to fall in relation to GDP every year until then

According to the UK Office of Budgetary Responsibility (OBR), UK government net debt is expected to rise in cash terms every year, but to start falling as a percentage of GDP from 2016-17 onwards. It reaches 74.7 per cent of GDP in 2020-21.

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Geoff Riley

Geoff Riley FRSA has been teaching Economics for nearly forty years. He has over twenty years experience as Head of Economics at leading schools. He writes extensively and is a contributor and presenter on CPD and Revision conferences in the UK and overseas.

@tutor2uGeoff

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