Brown set to meet golden rule
Gordon Brown is on target to meet his golden rule, according to the latest official figures.
The Office for National Statistics (ONS) says UK public sector net borrowing (PSNB) is almost in line with the Chancellor’s original forecasts for the fiscal year 2004/5.
Its figures show that borrowing for the year was £1.3 billion lower than last year, at £34.5 billion.
Meanwhile, tax receipts rose £1.6 billion to £36.6 billion, thereby leaving net borrowing largely on course to hit Treasury forecasts.
Under his self-made golden rule, Mr Brown only borrows to invest. He believes he will meet his target with £6 billion to spare.
However, critics predict that even if Mr Brown does manage to stick to the rule during the current cycle, he will be facing a budget deficit in the next cycle.
This could force him to raise taxes by up to £10 billion a year to cover the public spending he has had to neglect this cycle, experts warn.
“With the economy unlikely to meet Mr Brown’s forecast of three per cent growth this year we still expect taxes to have to rise after the election to put the public finances on a more sustainable footing,” said Capital Economics’ chief UK economist, Jonathan Loynes.
And, the Shadow Chief Secretary to the Treasury, George Osborne, said all the figures proved was that the Chancellor had got his figures wrong again.
Mr Osborne said: “These figures show the current budget deficit is half a billion pounds worse than the Chancellor said it would be in the Budget just one month ago.
“This is further backing from the Government itself for what almost all the independent experts have been saying – that there is a shortfall in Labour spending plans that they would have to fill with higher taxes.”
