Gordon Brown's tax and spending plans received a blow yesterday as it emerged that the City of London had unanimously rejected his borrowing figures.
The Treasury's monthly survey of City economists showed none now believes he can hit his optimistic targets for public sector debt this year and next.
All 29 said he would need to borrow more than the £27bn the Chancellor forecast in the April Budget, with some warning the shortfall could rise as high as £38bn. The average forecast is for a £33.1bn shortfall.
In the following financial year beginning next April, when Mr Brown believes the deficit will fall to £24bn, independent economists believe the shortfall will actually increase to £35bn.
The gloomiest forecast, from Bank of America, was a £47bn deficit - equivalent to 4.4 per cent of GDP, putting the UK in breach of the 3 per cent limit in the Maastricht treaty.
Michael Howard, the shadow chancellor, said Mr Brown would have to revise his forecasts for a third time in the forthcoming pre-Budget report. The Treasury pointed out the UK has the lowest stock of net debt in the G7 and said current forecasts of 3 per cent of GDP compared with 8 per cent under the last Tory government.
And there was good news for the Treasury as the survey showed that, for the first time since the Budget, City economists believe Mr Brown will hit his growth forecasts this year. The average forecast for GDP growth rose to 2.0 per cent, at the bottom of the Treasury's range. However, only two economists believe he will hit his forecast for growth of 3.0 and 3.5 per cent in 2004.Reuse content