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Chancellor Skating on Thin Ice on Golden Rule

John Hawksworth Head of Macroeconomics PricewaterhouseCoopers discusses the new Treasury forecasts for economic growth and public borrowing
The Chancellor remained bullish in his Pre-Budget Report (PBR) arguing that his public spending plans could be afforded with no need for further tax increases. But how prudent are the Chancellor's forecasts for the public finances and will he meet his Golden Rule of borrowing only to invest over the economic cycle as he claims? Below we discuss in turn the new Treasury forecasts for economic growth and public borrowing.
Treasury growth forecasts relatively optimistic for 2005
The Treasury expects economic growth to be 3.25% in 2004 (in the middle of the 3–3.5% forecast range set out in...

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