Deficit ‘downgraded by £8bn’
By politics.co.uk staff
Public borrowing for the year to the end of March will reach £140 billion, according to a forecasting group.
The Ernst and Young Item Club’s prediction is £8 billion less than the estimate provided by the Office of Budget Responsibility last November.
If confirmed in Wednesday’s Budget, the second delivered by Conservative chancellor George Osborne, the extra cash could encourage Labour to call for a slowing in the pace of the government’s deficit reduction programme.
The Item Club’s senior economic adviser Andrew Goodwin advised against such an approach, anticipating Mr Osborne will not seek a short-term political boost from the windfall.
“We are at the start of a very long and treacherous road and there will be many more obstacles to negotiate before the government’s finances are restored to balance,” he said.
“That said we think the chancellor, based on our current forecast, should meet his fiscal mandate. But for now there are unlikely to be any spring give-aways in this week’s Budget.”
Yesterday Mr Osborne ruled out imposing more spending cuts or tax rises, as Britain struggles to return to growth after last year’s recession.
He is expected to take steps to mitigate the impact of high fuel costs and could outline how the money raised from the banking levy will be spent, but is concentrating on promoting the government’s plans for growth.
“We’ve taken Britain out of the fiscal danger zone. That’s reflected in the interest rates that families in Britain pay,” Mr Osborne told BBC1’s The Andrew Marr Show yesterday.
“Now we have to move from rescue to recovery and reform.”
