Continue, says Treasury

per cent next year, and 2.2 per cent the year after. Wages will only rise above 3 per cent in 2025, at 3.3 per cent.

Unemployment, currently hovering above 6 per cent, doesn’t get back down to where it was before the pandemic until 2025, and will stay above 6 per cent until 2023.

And the creaking and groaning machinery of the state will continue to haemorrhage money. District health board deficits are expected to average $600 million a year – an optimistic measurement, with Treasury warning that there is ‘‘a significant risk that DHBs’ deficits may be higher’’.

The economy as a whole will grow – and fast. Treasury is pegging 1.5 per cent growth next year, picking up to 2.5 per cent in

2022, before roaring ahead with

3.7 per cent growth in 2023, 3.8 per cent in 2024, and 3.2 per cent in

2025.

The Government’s own books are likely to look much better than was feared in Treasury’s previous set of forecasts, delivered just before the election. An improving economy means higher tax receipts and lower expenses on things like benefits.

Treasury expects the Government to take in about $4 billion worth of tax each year for the next four years than it did before the election.

It also expects its expenses to be $5.3b lower next year.

There will still be large Government deficits. Next year there will be a $21.6b deficit, dropping to $7.5b by 2024. Those are large deficits, but they are between $10 and $3.9b lower each year than Treasury feared just a few months ago.

A stronger economy, less borrowing and smaller deficits mean the Government will be borrowing far less than initially feared.

Net core Crown debt will rise to 52.6 per cent of GDP by 2023 before falling to 46.9 per cent of GDP by 2025.