Question to the HM Treasury:

To ask Mr Chancellor of the Exchequer, what assessment he has made of where the compensating permanent deficit or deficits will appear in the national income accounts as a result of his Department sustaining a permanent budget surplus.

In the UK National Accounts, the income and expenditure of different sectors (household, corporate, public sector, and the rest of the world) imply paths for each sector’s net lending or borrowing. By identity, these must sum to zero as for each borrower there must be a lender.

If the public sector were to run a budget surplus, there would be an offsetting change in the net lending position of one of the household, corporate and the rest of the world sectors. More information is available in the latest OBR Economic and Fiscal Forecast (July 2015). A link to the information is provided below:

http://budgetresponsibility.org.uk/economic-fiscal-outlook-july-2015/