Powered by MOMENTUM MEDIA
moneymanagement logo
 
 

UBS reduces fiscal cliff expectation to $80b

UBS/

29 July 2020
| By Laura Dew |
image
image image
expand image

UBS has reduced its expectations for a potential fiscal cliff from $100 billion to $80 billion as a result of recently-announced expanded Government stimulus.

At the start of the month, the firm said it expected Australia to reach a $100 billion fiscal cliff in the fourth quarter of the year. This figure was calculated on the basis of the sum of income tax, GST and company tax in one quarter.

However, it had since updated its figures as the Government had extended JobKeeper by six months and JobSeeker by three months, a combined stimulus measure of $20 billion. Early access to superannuation had also been extended by three months until the end of 2020.

There was also the possibility of further stimulus still to come in the shape of investment tax breaks, income tax cuts and increased infrastructure investment.

In an economic note, the investment bank said: “To date, we estimate the total Government (including States) fiscal stimulus is $214 billion or 11% of GDP. We are now factoring in $50 billion of additional fiscal stimulus in the near-term to our forecasts.

“While the size of the quarter-on-quarter policy cliff in Q4 has been reduced (and we expect more stimulus ahead to smooth it further), it remains very large currently at $80 billion or 16% of quarterly gross domestic product.”

It also expected unemployment would peak at 8%, in contrast to figures from the Reserve Bank of Australia which said it expected unemployment to peak at 10%, but would be slow to recover and remain at 7.5% at the end of 2021.

 

 

Read more about:

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest news and developments in wealth management industry

MARKET INSIGHTS

The succession dilemma is more than just a matter of commitments.This isn’t simply about younger vs. older advisers. It’...

10 hours 16 minutes ago

Significant ethical issues there. If a relationship is in the process of breaking down then both parties are likely to b...

3 weeks 4 days ago

It's not licensees not putting them on, it's small businesses (that are licensed) that cannot afford to put them on. The...

1 month ago

After last month’s surprise hold, the Reserve Bank of Australia has announced its latest interest rate decision....

3 weeks 6 days ago

ASIC has released the results of the latest adviser exam, with August’s pass mark improving on the sitting from a year ago. ...

3 days 4 hours ago

While the profession continues to see consolidation at the top, Adviser Ratings has compared the business models of Insignia and Entireti and how they are shaping the pro...

1 week 5 days ago

TOP PERFORMING FUNDS

ACS FIXED INT - AUSTRALIA/GLOBAL BOND