Structural: the 6.5 billion pound word

"We have a structural budget deficit—we spend more than we collect in taxes—and that is not going to be fixed by economic growth alone."—George Osborne, 4 June 2015

The Chancellor of the Exchequer, George Osborne, welcomed his new opposite number Chris Leslie to the Commons last Friday by wishing him "the same success that his predecessors enjoyed". Business as usual, then.

Slightly more unusual was Mr. Osborne's description of the budget deficit—a subject the Chancellor is usually pretty sharp on.

The Chancellor could be making two separate - accurate - points. But read together it looks inaccurate: the government spending more than it receives doesn't mean its running a structural deficit. Not all deficits are structural.

A structural deficit means that the government would be borrowing when the economy was 'in the middle' of the business cycle—so in neither an upturn nor in a downturn.

The distinction is fairly important. Take an economy in a boom period. Output and employment are high, so tax revenues are likely to be above their 'normal' level while spending on things like unemployment benefits is likely to be lower.

The government could then be running a surplus simply because of where the economy is in the business cycle, while still having a structural deficit.

This year, the government is expected to borrow about £75.3 billion. The structural deficit is expected to be slightly lower at £68.8 billion. While the UK is expected to be one of the fastest growing G7 nations this year, the economy is producing below its 'natural' level of output. If the economy were operating at this level, then the deficit would be about £6.5 billion lower.