Ben Chu: It will soon be crunch time for Osborne's rules

Outlook After those atrocious July public-borrowing figures: what next? A hefty revision of the 2012-13 deficit forecasts made in March by George Osborne's watchdog cum forecaster, the Office for Budget Responsibility looks likely.

The OBR jutted out its chin yesterday and declared that the advancing army of disappointing borrowing data could yet be repelled. "It is too early to judge whether full-year, central government expenditure will overshoot the forecast," it declared.

But this lacks credibility given that after just four months of the fiscal year, the Government has already borrowed £45bn out of its £120bn target. That puts the Government on course to borrow north of £150bn in 2012/13 according to some City analysts.

And the OBR is, of course, no stranger to revisions. It has increased its borrowing forecasts repeatedly since it was established after the last election. The crunch will come in November when the OBR will be required to give its economic update at the time of the Chancellor's autumn statement.

Yet what's even more interesting is whether the OBR will conclude, once again, that the poor economic data this year means the UK's structural deficit is larger than it previously thought. This is what OBR head Robert Chote and his small team concluded in November 2011.

The upshot was that the Chancellor was compelled to pencil in another £15bn in public-spending cuts for the next parliament in order to meet his fiscal mandate of eradicating the current structural deficit over a five-year horizon.

If Mr Chote and co serve up more of the same in November, Mr Osborne will have to wield the axe once again.

And there's an even bigger headache for Mr Osborne. The OBR might well conclude that the Treasury is also on course to miss the second part of the Chancellor's fiscal mandate: to make the national debt fall as a share of GDP by 2015-16.

The Chancellor can meet the first part of this by pushing spending cuts out to the next parliament. But there's no such flexibility on part two. If the OBR concludes that the Chancellor is off target, he will have to come up with more cuts to take place before the next election. Or, of course, he could decide to scrap the target altogether.

Watch this space: make or break time for the Chancellor's fiscal mandate is fast approaching.