- The 2015 Budget sees a continuation of fiscal restraint with new initiatives being funded out of the new allocation allowance along with some re-prioritisation of other spending.
- Revenue forecasts have been lowered again as a result of lower nominal GDP growth but it is still forecast to rise as a proportion of GDP over the projection period.
- As has been well flagged the achievement of an operating surplus has been delayed to 2015/16. However the trend improvement in the operating balance remains in place which is important for markets and rating agencies.
- Economic assumptions underpinning the Budget are broadly in line with our own and therefore appear reasonable. Key judgments about the risks to the outlook also appear reasonable.
- Key policy initiatives include a package of measures to support children in hardship in return for greater work obligations as well as the earlier announced reduction in ACC levies and measures to tighten the tax treatment of housing.
- As expected the bond program remains largely unchanged and the fiscal impulse remains negative on average over the projection period. This Budget should hold no surprises for financial markets.
For full coverage see our Insights Paper here.