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Today’s Half Year Economic and Fiscal Update (HYEFU) highlighted a deterioration in the economic and fiscal outlook compared to Budget 2024 forecasts. Economic growth is predicted to begin to recover from 2025. However, it will be slower than previously forecast. The fiscal outlook is weaker across all indicators compared to Budget 2024.
A new headline operating balance measure “OBEGALx’ was introduced today. This measure excludes ACC revenue and expenses, and will be reported alongside OBEGAL (as the total Crown indicator). Both indicators show a delay in the return to surplus compared to previous forecasts – with OBEGALx expected to return to surplus in 2028/29, and OBEGAL not expected to return to surplus within the forecast period.
Alongside the updated fiscal and economic outlook, the Budget Policy Statement signalled a continued focus on fiscal restraint for Budget 2025, with the Government retaining the decreased $2.4bn operating allowance announced at Budget 2024 over the forecast period. We note that $1.37bn of this operating allowance is already committed to Health initiatives.
Read our Half Year Economic and Fiscal Update 2024 and Budget Policy Statement 2025 summary
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