UK public finances could be £7 billion in deficit rather than £7 billion surplus

The IMF has warned that counter to the predictions of the Office of Budget Responsibility that UK public finances could be GBP7 bln in deficit rather than a GBP 7 bln surplus partly on the assumption that the new government would have a greater outlay on welfare and tax credits that predicted. The IMF expects that UK growth will slow to 2.3% from 2.7% and that a messy outcome to the election would contribute to the slowdown.

These concerns compound existing worries that very low productivity levels in the UK could stifle growth going forward. These risks suggest that the deflationary threat in the UK could persist for longer than the BoE currently expects and could mean that BoE interest rates stay low for longer – a development which could weaken GBP medium-term. #GBP #UK #Debt