Fiscal watchdog ups borrowing forecasts by £20bn a year

The UK’s fiscal watchdog has increased its forecasts for annual borrowing by £20.0bn a year, after changes to the way student loans are accounted for.

The Office for National Statistics changed the way it treats student loans earlier this year to give a more accurate picture of UK public finances.

It means the Office for Budget Responsibility, which was established in 2010 to provide independent analysis and oversight of the UK’s public finances, has updated its most recent forecasts, published in March.

It said: “We have restated our March 2019 borrowing forecast to include recent ONS statistical changes but have not incorporated any other new data, new judgements nor include an update to the economy forecast.”

It added: “This restatement increases measured public sector net borrowing by roughly £20bn a year, which means that the deficit would still be in excess of £30bn in the final year of the forecast in 2023-24. By contrast, the restatement lowers our forecast for net debt.”

The budget deficit was predicted to be around £13.5bn by 2023-24.

Although a technical restatement, the revision means Chancellor Sajid Javid will have less scope for spending plans when he draws up the new government’s first Budget, currently expected by the beginning of March.

The OBR said it had originally intended to publish the changed forecast on 7 November but following Cabinet Secretary advice had delayed publication until after the general election.