Federal budget $27bn in the red and won’t return to balance for a decade, Myefo forecasts

Budget downgrade blamed on Australian economy being hit harder than anticipated by higher interest rates, cost of living pressures and global uncertainty

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Australia's federal budget is on-track for a deficit of $26.9bn this financial year and is not projected to return to balance until 2034-35, according to the mid-year economic update (Myefo).

On Wednesday the treasurer, Jim Chalmers, and finance minister, Katy Gallagher, released the update, which breaks Labor's streak of two full-year budget surpluses with a deficit in its third year, albeit one that is $1.3bn smaller than projected in May.