Fiscal sustainability report – July 2020

The Fiscal sustainability report (FSR) usually focuses on long-term projections for the public finances and sustainability of debt. Typically, our most recent medium term forecast serves as the ‘jumping-off point’ but as the March 2020 forecast was finalised in February before the full impact of the Coronavirus pandemic became clear, for this report we produced three scenarios for the medium term before extending our assessment to the long term.

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Fiscal sustainability report – July 2020

July 14, 2020 – 2.10 MB

The structure the report is as follows:

  • Chapter 1: describes the main conditioning assumptions underpinning our analysis and outlines our approach at each step of the process.
  • Chapters 2 (economy) and 3 (fiscal) lay out three medium-term scenarios that then serve as different starting points for our long-term sustainability analysis.
  • Chapter 4: the conclusions of the long-term sustainability analysis.
  • Chapter 5: devoting more space than usual to the risks to sustainability posed by the shock.

Ordinarily the FSR would contain a discussion of the Whole of Government Accounts (WGA). The 2019-20 WGA was, however, delayed by the pandemic.

Supporting documents

Presentations

Boxes

Within each of our key publications we include topical ‘boxes’. These self-contained analyses are unique to this publication and tend to cover recent developments in the economy or public finances that complement the main discussion of our analyses.

The Chancellor’s 8 July ‘Summer Economic Update’

On 8 July, the Chancellor announced further measures to support the economy as the lockdown is eased, which we were not notified of in sufficient time to incorporate into our scenarios. This box described the measures included in the package and the costs as estimated by the Treasury.

Non-payment of tax liabilities in our scenarios

So far during the lockdown period, many businesses are struggling to meet their usual tax payment schedules and are seeking instead to delay those payments. In this box we considered the channels through which this might impact tax receipts and set out the key uncertainties in our medium-term scenario assumptions.

The economic and fiscal impact of the pandemic around the world

The economic and fiscal impact of the pandemic around the world
The coronavirus pandemic has hit the economic and public finances of all countries around the world as a result of lockdown measures imposed to control the outbreak and fiscal support provided to aid individuals and businesses. In this box we assessed how the UK had fared relative to other major advanced economics by looking at pandemic-related indicators and forecasts.

Performance against the Budget 2020 fiscal rules

Performance against the Budget 2020 fiscal rules
At Budget 2020 we assessed the Government's performance against the three proposed fiscal rules that featured in the Conservative Party's 2019 election manifesto. In this box we assessed whether the Government could meet these fiscal rules under our central, upside and downside scenarios.