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The IFS green budget – February 2017 (chapter 9 ICAEW: debt)

This 2017 report comes at a crucial time for the public finances. New fiscal targets and a different fiscal direction were set out in the Autumn Statement just a couple of months ago. The most significant issue – the uncertainty over the medium-term effects of the UK leaving the EU – remains. By providing an independent, evidence-based commentary on the economic choices and challenges that we face, this publication offers much-needed perspective for policymakers as well as the wider public ahead of two important fiscal events in 2017. The Institute of Chartered Accountants in England and Wales (ICAEW) believes that the government needs to focus not just on the deficit as recorded in the National Accounts, but also on long-term liabilities for things such as public service pensions and clinical negligence. The accounting deficit which includes these liabilities is much bigger than, and has come down much less quickly than, the headline deficit. In addition, there is a case for a new focus on debt management. Something like £650 billion of debt to be issued over the next five years, and how this happens – how much is index linked and what average maturities are issued – will matter to the public finances for years to come. Chapter 9 focuses on the government’s debt funding strategy and the need to refinance a substantial proportion of existing debt.