Fiscal deficit explained

The fiscal deficit is the gap between the government's spending and its income (mostly taxes) in a year, shown as a % of GDP. To fund it, the government borrows.

• Higher deficit → more government borrowing → can push up bond yields and inflation.
• Lower deficit → seen as fiscally disciplined, generally positive for bond markets.

Debt-fund and gilt investors watch the Budget's deficit target closely, as it affects interest rates.

→ Follow the macro picture on the Macro Economy page.