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PBR 2008 — Economic View

John Hawksworth Head of Macroeconomics at PricewaterhouseCoopers LLP evaluates the Treasury's new economic forecasts and discusses the process of restoring the public finances to health in the medium term
The Chancellor of the Exchequer Alistair Darling faced a huge challenge in designing a PBR package that was both effective in boosting the economy in the short term and affordable in the medium term. In the event he announced a package involving a net fiscal stimulus of around £20 billion in 2008/09 and 2009/10 but despite this he predicted that the economy will shrink by around 1% in 2009.
The budget deficit is therefore set to balloon to a projected peak of around £118 billion (8% of GDP) in 2009/10 before falling back in later years on the...

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