Federal Budget: Holding The Line

By Tony Brennan, Chief Investment Strategist

The 2024/25 Federal Budget maintained the moderate approach of the Government’s earlier budgets, which resulted in surpluses for the past two years. The budget is set to return to deficit over the next few years, but the Government didn’t add greatly to the deficits with new initiatives and kept the peak in the deficit to 1½% of GDP. 

Admittedly, the deficits over the next few years will be at a time when the economy is forecast to remain at close to full employment, so fiscal policy might still be considered expansionary in that context; and relative to a stance that maintained closer to balanced or surplus budgets, it might tend to lessen the scope to ease monetary policy through lower interest rates.

Contact your CG Adviser for a full copy of the report.