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Sustainable Economy > Published by Cormac Hollingsworth, September 22nd 2011 at 7:15 am

Growth cut the 2010-11 deficit as fast as cuts

Yesterday the ONS released new revised figures (pdf) for 2010-11 borrowing, a net borrowing of £136.7 billion. Still an enormous number, but a smaller number than HMT was predicting in March 2010; then the number was £163bn.

George-Osborne-grim The consensus at the time was that recovery from a balance sheet recession would be slow. But as we saw last year, left to recover, the economy can defy the consensus, and growth definitely wasn’t slow.

A year ago, even George Osborne was celebrating that GDP was growing at its fastest rate since 1999. The predictions for borrowing for 2010-11 were also frequently downgraded as each quarter of fast growth continued.

Of course that all stopped in the fourth quarter, and now the chancellor’s having a bout of amnesia about how fast growth can go.

We can now highlight the effect growth can have:

Budget deficit 2009-10

£156.1bn

Darling 2010 budget effects	+ £1.4bn
June 2010 emergency budget cuts	- £8bn
Effect of VAT rise accrued from Jan 2010	-£2bn
Fastest growth since 1999	-£10.8
Outturn	£136.7bn

Osborne’s strategy was 75% cuts and 25% taxes, but he forgot to add in growth. Growth last year cut the deficit as much as cuts.

At the moment, the OBR is predicting the deficit will be cut only to £121bn:

Budget Deficit 2010-11

£136.7bn

Darling’s budget changes (estimate from March 2010)	-£3.7bn
OBR June 2010 estimates of policy changes	-£16bn
Stagnation increase to deficit	+£5bn
OBR current prediction of the 2010-11 deficit	£122bn

It is likely that this year the stagnation since Q4 2010 will be a net drag on cutting the deficit. We believe it will be worse than the £4bn here. The OBR noted yesterday receipts still aren’t growing as fast as it likes.

At the same time unemployment rose by 80,000 – if it continues in that direction it could pose a problem. OBR’s fiscal prediction is 8.2% unemployment; it’s already at 7.9%. Both will push the borrowing higher.

http://twitter.com/politicalplanet/status/116759105070305280 Political Planet

Growth cut the 2010-11 deficit as fast as cuts: George Osborne’s strategy was 75% cuts and 25% taxes, but he for… http://t.co/h2cj1VJZ
http://twitter.com/hens4freedom/status/116759300118036481 Hens4Freedom

RT @leftfootfwd: Growth cut the 2010-11 deficit as fast as cuts: http://t.co/xSwvr1Ob writes @CormacHolly #Osborne #TheLostRecovery
http://twitter.com/maxafax/status/116760912727252992 Max Ramsay

Growth cut the 2010-11 deficit as fast as cuts: http://t.co/9kkFCHYP writes @CormacHolly #Osborne #TheLostRecovery
http://twitter.com/fio_edwards/status/116763313832067072 Fiona Edwards

Growth cut the 2010-11 deficit as fast as cuts: http://t.co/9kkFCHYP writes @CormacHolly #Osborne #TheLostRecovery
http://twitter.com/g56g/status/116767508425482240 Gill Goodswen

Growth cut the 2010-11 deficit as fast as cuts: http://t.co/9kkFCHYP writes @CormacHolly #Osborne #TheLostRecovery
http://twitter.com/therightarticle/status/116767714428731392 Michael

Growth cut the 2010-11 deficit as fast as cuts – http://t.co/OfCr7BLs
http://twitter.com/danielelton/status/116780605131333632 Daniel Elton

@lisybabe @leftfootfwd seems to be working now. Btw, an article all progs should read on econ: http://t.co/kHJ88RBW
http://twitter.com/hanariaz/status/116786875880058880 hana riaz

Growth cut the deficit 10/11 as much as cuts http://t.co/Wp20v3zw @leftfootfwd
http://twitter.com/shamikdas/status/116793403840270336 Shamik Das

Growth cut the 2010-11 deficit as fast as cuts: http://t.co/9kkFCHYP writes @CormacHolly #Osborne #TheLostRecovery
http://twitter.com/lndguy/status/116798076173299712 Guy

Growth cut the 2010-11 deficit as fast as cuts http://t.co/NeZiV0oI
http://twitter.com/steve_trow/status/116809621741649920 Steve Trow

Growth cut the 2010-11 deficit as fast as cuts: http://t.co/9kkFCHYP writes @CormacHolly #Osborne #TheLostRecovery
http://twitter.com/unisonmv/status/116822386678046720 UNISON MillionVoices

RT @leftfootfwd: Growth cut the 2010-11 deficit as fast as cuts: http://t.co/8Zr1G2Gs writes @CormacHolly #Osborne #TheLostRecovery
http://twitter.com/lisaansell/status/116822504089202689 Lisa Ansell

RT @leftfootfwd: Growth cut the 2010-11 deficit as fast as cuts: http://t.co/8Zr1G2Gs writes @CormacHolly #Osborne #TheLostRecovery
Richard

For an evidence-based blog, you really are quite careless with figures. You state “At the moment, the OBR is predicting the deficit will be cut only to £121bn”, yet in the following sum, we read “OBR current prediction of the 2010-11 deficit 122bn”. You go on to state “It is likely that this year the stagnation since Q4 2010 will be a net drag on cutting the deficit. We believe it will be worse than the £4bn here.” Yet the sum above states “Stagnation increase to deficit 5bn”. If you really want the evidence to be taken seriously, accuracy should be your first priority.
http://www.leftfootforward.org/2011/10/economic-crisis-gets-worse-spending-borrowing/ The crisis gets worse: For every £4 spending is cut, it only cuts borrowing 75p | Left Foot Forward

[...] Growth cut the 2010-11 deficit as fast as cuts – Cormac Hollingsworth, September 22nd [...]
http://twitter.com/cormacholly/status/136877729143463937 Cormac Hollingsworth

@TheGreenBenches … when we had growth http://t.co/AKtroNo9
http://twitter.com/cormacholly/status/138756717440794625 Cormac Hollingsworth

Cameron claims debt is a drag on growth. The facts that: Growth cut the 2010-11 deficit as fast as cuts http://t.co/AKtroNo9 @leftfootfwd
http://twitter.com/alison_mcgovern/status/138758401655193600 Alison McGovern

Cameron claims debt is a drag on growth. The facts that: Growth cut the 2010-11 deficit as fast as cuts http://t.co/AKtroNo9 @leftfootfwd
http://twitter.com/catkinson80/status/138759458754007040 Catherine Atkinson

Cameron claims debt is a drag on growth. The facts that: Growth cut the 2010-11 deficit as fast as cuts http://t.co/AKtroNo9 @leftfootfwd
http://twitter.com/edward_hortop/status/138762072996589569 Edward Hortop

Cameron claims debt is a drag on growth. The facts that: Growth cut the 2010-11 deficit as fast as cuts http://t.co/AKtroNo9 @leftfootfwd
http://twitter.com/seemachandwani/status/138770990661505024 Seema Chandwani

http://t.co/UAasmgny << This is a confusing article, but I think it says Osbourne failed his Maths GCSE & we're all screwed!!
http://twitter.com/nugent/status/138881264563400704 Andy Nugent

Cameron claims debt is a drag on growth. The facts that: Growth cut the 2010-11 deficit as fast as cuts http://t.co/AKtroNo9 @leftfootfwd
http://www.leftfootforward.org/2011/11/kellner-the-public-dont-like-the-tories-but-theyve-signed-up-to-their-economic-argument/ Kellner: The public don’t like the Tories, but they’ve signed up to their economic argument | Left Foot Forward

[...] Growth cut the 2010-11 deficit as fast as cuts – Cormac Hollingsworth, September 22nd 2011 Share | Permalink | Leave a comment /* [...]
http://twitter.com/aspiemum/status/144079859675705344 Vanessa

MP makes the point growth will cut the deficit as much as cuts; more frm @cormacholly: http://t.co/Xo6Xy5rd
http://twitter.com/jphimister/status/144082288416788481 Joseph Burnett

MP makes the point growth will cut the deficit as much as cuts; more frm @cormacholly: http://t.co/Xo6Xy5rd
http://twitter.com/syzygysyzygysue/status/144088995851272192 Sue Davies

MP makes the point growth will cut the deficit as much as cuts; more frm @cormacholly: http://t.co/Xo6Xy5rd
http://twitter.com/goodoldmj/status/144116713414344705 Martin Johnston

MP makes the point growth will cut the deficit as much as cuts; more frm @cormacholly: http://t.co/Xo6Xy5rd
http://twitter.com/threadbarepanda/status/144125838869278721 Panda

MP makes the point growth will cut the deficit as much as cuts; more frm @cormacholly: http://t.co/Xo6Xy5rd
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