A hat tip to Sam Walker from Spalding GS for spotting this excellent piece by Michael Blastland in the BBC online magazine. Context is all important when the media are presenting news of ‘big numbers’ such as the size of the government fiscal deficit or the trade deficit. Too often the headline data is not adjusted for inflation, expressed as a share of national income or adjusted for the stage of the economic cycle. This latter adjustment is certainly valid for the budget deficit. I have uploaded a short chartroom presentation on government borrowing which looks at some of the most recent numbers and also the cyclically adjusted deficit using forecasts from the OECD.

Chart Room Fiscal_Numbers.ppt