Budget 2021: Sunak launches tighter fiscal rules to repair public coffers

Chancellor Rishi Sunak announced a fresh set of fiscal rules at the budget today in a bid to repair the damage inflicted on the public finances from the Covid-19 crisis.

Sunak told the House of Commons the debt-to-GDP ratio must be shrinking and the government must not borrow to fund day-to-day spending.

The rules apply over a three year horizon. According to the Office for Budget Responsibility, the government’s spending watchdog, they have already met the rules.

Rishi Sunak said: “Our credibility comes as much from what we do as what we say.” 

“So I’m pleased to tell the House that because our plan is delivering a stronger economy and because I’ve taken tough but responsible decisions on the public finances, the OBR report today that our fiscal rules have all been met.”

The OBR revised down its estimates for borrowing over the next year by over £50bn to £183bn. Borrowing next year was also slashed by £20bn.

By the middle of the decade, government borrowing is lower than the OBR’s forecasts published before the onset of the pandemic, Richard Hughes, chairman of the OBR said.

More to follow.