In his Autumn Statement in December Mr Osborne forecast that total spending would fall to 35.2 per cent of GDP by 2019-20. But in this week’s Budget he revised this up to 36 per cent – which is only the lowest rate since 1999-2000.
This upward revision came after a big windfall. Because gilt yields have fallen since December, and the market expects them to stay low, the OBR forecast that spending on debt interest in 2019-20 will be £9bn less than it expected in December. The Chancellor intends to use this money to increase departmental spending. He now expects this to be 10.2 per cent higher in 2019-20 than he predicted as recently as December.