Governments are on track to loosen their budgets by $50 billion in the middle of an inflation crisis and rising interest rates.
Already a subscriber?Governments are on track to loosen their budgets by $50 billion in the middle of an inflation crisis and rising interest rates, triggering a call for federal Treasurer Jim Chalmers to lean on the states to rein in spending.
“The ACT and Victoria are technically in breach of the Loan Council limits if they were applied retrospectively,” he said.“The ACT cannot structurally run a budget surplus and Victoria is on a suicide mission to record borrowing, just as global interest rates are about to hit 5 per cent. and the RBA’s preferred underlying inflation measure was a sticky 4 per cent – above its 2 per cent to 3 per cent target.
The boost to aggregate demand in the economy from government consumption and investment, known as the national “fiscal impulse”, will increase from 2.2 per cent of GDP in 2022-23 to 3.3 per cent in 2023-24, to 4.2 per cent in 2024-25, he calculated.The jump in government-stimulated economic activity is close to the increase in 2009-10 following the global financial crisis.
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