Britain could be heading for a bigger budget deficit next
year than crisis-hit Greece and Spain, according to research by Morgan Stanley.
The Office for Budget Responsibility currently predicts that
Britain’s budget deficit could be £98bn next year, or 5.9pc of GDP
Economists at the investment bank calculated that Britain’s
budget deficit could total £126bn, or 7.8pc, of gross domestic product in
2013-14.
That would make Britain’s the highest projected European
deficit, with Morgan Stanley predicting that Greece’s would stand at 6.3pc and
Spain’s at just under 6pc. The Office for Budget Responsibility currently
predicts that Britain’s budget deficit could be £98bn next year, or 5.9pc of
GDP.
Morgan Stanley’s forecasts underline the pressure on
Chancellor George
Osborne efforts to cut the deficit, as official figures last week
showed that government
borrowing for the first five months of the financial year was running at more
than 25pc over target.
In the five months to August, and excluding the one-off
savings created by the Royal Mail pension fund and the Bank of England’s
Special Liquidity Scheme, the Government borrowed £61.3bn – 26.7pc more than in
the same period last year. The official borrowing target for the year is a rise
of just 0.5pc.
Economists predicted that the bleak picture on borrowing
threatened to undermine the Chancellor’s cast-iron fiscal rules. Howard Archer
of IHS Global Insight said: “It is likely in his autumn statement that he will
either have to acknowledge that he will be unable to start bringing down debt
as a percentage of GDP by 2015/16.”
Morgan Stanley, which published its analysis before the most
recent public sector borrowing figures, also predicted that at least one of Mr
Osborne’s fiscal rules could be broken.
“It may be time for a ‘Plan C’ of sorts,” said economists.
“The ‘least worst’ option, we think, would be to stick to the existing
austerity plans but make no attempt to repair the projected fiscal slippage and
risk breaking at least one of the fiscal rules,” they added.
A spokesperson for the Treasury said the Government was
committed to its fiscal plan. “Though the economic climate is challenging, in
August we borrowed less than the markets expected, and spending is on track for
the year,” they added. “The Office for National Statistics also revealed the
deficit in 2011-12 was almost £7bn lower than previously estimated, and down
nearly £40bn from two years ago.”
(Source)
-----------------------------------------------
* Facebook: National-Anarchist Movement (N-AM)
Posts
