A brief guide to the public finances
This guide provides a brief introduction to the UK public finances and to the terms used to describe them in the official statistics. We describe the main sources of government income and spending, and explain how these are used to calculate whether the government is running a surplus or a deficit. We also explain how government debt is defined and calculated.
The direct fiscal consequences of unconventional monetary policies
Since the financial crisis, the Bank of England’s Monetary Policy Committee (MPC) has deployed unconventional forms of monetary policy to support the economy. The full consequences of these interventions for the public finances – in the sense of comparing what the public finances look like now with how they would have looked in the absence of such interventions – is impossible to estimate with any confidence. Most of the effects are indirect – including the extent to which gilt purchases reduced gilt yields; the extent to which that induced further changes in asset prices; what effects that had on economic activity and employment; and so on. A second order, but still important, question to ask is how unconventional monetary policy measures have been directly accounted for in the public finances. We address that question in this explainer.
Forecast revisions database
Alongside our March 2016 Economic and fiscal outlook, we produced a database of fiscal forecast revisions which we intend to update at every fiscal event. The database contains a decomposition of revisions to all our fiscal forecasts since 2010 into underlying forecast changes, classification changes and policy changes.
It is also accompanied by analysis that explains the sources of these changes in Annex B of our March 2016 Economic and fiscal outlook.
We have updated the forecast revisions database to include all forecasts since.
Choose your own long-term projections
In our Fiscal sustainability report (FSR), we assess the potential fiscal impact of future government activity by making long-term projections of revenue, spending and financial transactions on an assumption of ‘unchanged policy’, as best we can define it. For our FSR 2017, we worked with ONS Digital to produce a tool that helps to illustrate the uncertainty around our long-term projections. We updated the tool to reflect the results in our 2018 FSR, but could not in 2020 as the 2020 FSR report focused on coronavirus scenarios.