The Curious Incident of the Surplus in the Night-Time

One of the challenges in getting to grips with the public finances is that government accounting can be just a little bit weird.  Without the strictures of double entry bookkeeping and balance sheets that (well) balance, it can often appear mysterious.

For example, take the Curious Incident of the Surplus in the Night-Time (or 2019/20 to be more specific).

A £10 billion surplus, according to the official forecasts published published just three weeks ago. If achieved, the Chancellor will have met his objective of balancing income with expenditure for the first time in decades. We will finally be in a position to start paying down some of the national debt, instead of just ‘inflating it away’ as a proportion of GDP.

But, hang on a second. Curiously, the Treasury is actually forecasting in the Budget that we will be £10 billion worse off in 2019/20, not £10 billion better off, with the national debt expected to increase from £1,715 billion to £1,725 billion over the year to 31 March 2020.

Even stranger, there is a forecast for £9 billion in asset sales, the proceeds of which we are told are used to pay off debt. So, a £10 billion increase in public sector net debt instead of the £19 billion reduction in debt that we might expect to see instead.

The Curious Incident of a Surplus in 2019/20.  One that doesn’t result in a positive improvement in the Government’s financial position.

A mystery indeed.


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