A Nasty Budget Update Coming Tuesday With Up To A Billion Dollars of New Debt Each Week

PHOTO: Getty Images

Nasty, is one forecast. Ugly, another.

Tuesday’s budget update is widely expected to show the federal government’s deficit forecast blowing out from $30.1 billion to about $50 billion.

Or more than $1 billion a week since the last forecast, the pre election economic and fiscal outlook, in August

MYEFO (Mid Year Economic and Fiscal Outlook) will also show that it will take much longer than expected to return to a budget surplus.

The new Coalition Government has been talking down the budget deficit since it took office from Labor in September.

Today Prime Minister Tony Abbott said: “What is going to happen tomorrow is that we will be ruling a line under the fiscal damage that Labor has done. Sadly, the economic damage will continue for some time.”

JP Morgan’s Stephen Walters says:

Treasurer Hockey reveals the updated Budget position Tuesday; it will be ugly. We forecast a deficit of $50 billion, with lots of nasties packed into the accounts for the current fiscal year which, conveniently, started under the previous goverment’s watch.

And UBS’s George Tharenou says gross government debt could now peak at $452 billion in 2016-17, a rise of $51 billion.

Watch for recalculated forecasts on GDP (currently 2.5 per cent), employment/unemployment and the Consumer Price Index.

This chart shows the latest official figures for government net debt. MYEFO will show a deeper fall below the line for 2013-14.

Chart by Business Insider Australia

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