Responsible public finances
1.11 The UK has the second lowest gross debt as a proportion of GDP in the G7,15 although
debt is currently high by historical standards as a result of a series of significant crises.16 From
the start of the financial year to the end of August, public sector net borrowing reached £58.2
billion. This is £21.4 billion lower than the same point last year but broadly in line with the
Office for Budget Responsibility’s (OBR) March forecast to date. Higher government spending
has largely been offset by lower borrowing in other parts of the public sector.17
1.12 The government has announced a significant policy package that will reduce the pressure
on households and businesses across the UK from rising energy bills. External forecasters expect
this support for households to lower CPI inflation by around 5 percentage points this winter.18
The package will lead to additional borrowing, but by cushioning real incomes and protecting
9 GfK Consumer Confidence Index, GfK, August 2022.
10 Retail Sales, Great Britain: August 2022, Office for National Statistics, September 2022.
11 Agent’s update on business conditions, Bank of England, August 2022.
12 Consumer price inflation, UK: August 2022, Office for National Statistics, September 2022.
13 UK Natural gas (NBP), Bloomberg (FN1 Comdty),
September 2022.
14 Labour Market Overview, UK: September 2022, Office for National Statistics, September 2022.
15 Fiscal Monitor, April 2022, International Monetary Fund, April 2022.
16 Public Sector Finances, UK: August 2022, Office for National Statistics, September 2022.
17 Public Sector Finances, UK: August 2022, Office for National Statistics, September 2022.
18 HM Treasury calculation of the average expected impact on the annual rate of CPI inflation, based on estimates from independent forecasters
collected from 8-16 September.
The Growth Plan 2022 11
viable businesses it will support GDP growth in the near term, reducing the risk of the UK
economy entering a deep and damaging recession which could weaken the fiscal position, by
leading to elevated borrowing. This package in turn lays the foundations for long-run growth.
Lowering inflation in the near term will reduce debt servicing costs, while boosting economic
activity which will create an indirect fiscal benefit through higher tax receipts.
1.13 To fund the cost of this package, the Debt Management Office Net Financing Requirement
(NFR) in 2022-23 has been revised upwards, from £161.7 billion in April 2022 to £234.1 billion
in September 2022. This will be financed by additional gilt sales of £62.4 billion and net Treasury
bill sales for debt management purposes of £10.0 billion, relative to April.
1.14 Fiscal policy will contribute to the government’s central economic mission of boosting
long-run trend growth. The Growth Plan sets out an ambitious first step towards achieving
2.5% trend growth in GDP, by launching supply-side reforms and cutting taxes for businesses
and households (see chapter 3). Faster economic growth will boost living standards and will also
help support the sustainability of the public finances, primarily by growing the tax base.
1.
15 Maintaining fiscal sustainability in the medium term is essential to provide the confidence
and stability to underpin long-run growth. The government is committed to fiscal discipline and
will provide an update on its medium-term fiscal plan at the next fiscal event. This will build on
three key pillars:
• a clear commitment to fiscal responsibility and reducing debt as a proportion of GDP over
the medium term
• taking the responsible decisions needed to achieve this, including keeping spending
under control
• maintaining strong institutions and frameworks.
1.16 The Chancellor has commissioned the OBR to produce a forecast to be published by the
end of this calendar year. As is usual, the government will provide an update on its position on
the fiscal rules alongside the next forecast.
1.17 As part of a disciplined approach to spending, departments will focus on deploying their
existing budgets on the government’s top priorities. They will also continue to find ways to
work more efficiently and to drive economic growth through their spending. The Chancellor
will shortly write to each department asking them to set out how they will prioritise growth
within their plans.
1.18 The government will review the spending control framework, including the business case
process, to accelerate decision making across government.
