Debt and deficit
So much for the looming surplus!
This year the budget deficit is forecast to surpass a record $213 billion as the government tips in massive stimulus in order to reset the economy for growth in 2021.
Net debt is now forecast to peak at $966 billion in 2024...call it near enough $1 trillion in round numbers.
Source: Australian Treasury
Even with the enormous economic support the unemployment rate is only expected to come down to 6 per cent in 2022-23, and we'll be seeing the government run significant deficits for some years to come.
Gross debt is now projected to stabilise at 55 per cent of GDP, following the forthcoming surge.
Source: Australian Treasury
Among some other main points of interest, the 2020-21 Budget delivered significant tax relief.
Source: Australian Treasury
Yields down
However, here's a quick bond market snapshot update today, for anyone suggesting that the budget deficit blowout and surging government debt could kill us on interest repayments:
The break-even 10 year inflation rate has been running at under 2 per cent since June 2018, and hasn't been much above 2 per cent since late 2015.
Australia's 10-year bond yield is mired well below 1 per cent.
All aboard the debt truck...
