George Osborne 'set to miss key debt target'
Wednesday 07 November 2012
Chancellor George Osborne will miss a key debt target unless he delivers new measures in his forthcoming mini-budget, the European Commission (EC) warned today.
The Government is unlikely to be able to reduce debt as a share of gross domestic product (GDP) by 2015/16 in light of recent public finance figures, the EC said.
Mr Osborne will be forced to take action - such as further spending cuts or tax rises - in his autumn statement in December if the target is going to remain a possibility.
However, it is now widely expected that the Chancellor will admit the goal can no longer be achieved, rather than make the unpopular decision of unleashing further austerity measures on the UK.
The EC added that the "hard to explain" resilience of Britain's labour market is unlikely to remain so buoyant in the coming months with the unemployment rate expected to peak at around 8% in 2013.
The bleak assessment came as the EC slashed its growth forecast for 2012 from growth of 0.5% to a 0.3% decline as low consumer spending and eurozone turmoil take their toll.
The EC said the outlook for the remainder of 2012 "remains bleak", while 2013 should see a "marginal" improvement to growth of 0.9%, as rising wages and low and more stable inflation lift spending. The economy should continue to strengthen in 2014 with growth expected at 2%.
The EC said uncertainty in the economic outlook in the UK was holding back investment decisions with credit constraints, mainly for small businesses, dampening activity.
While the flow of credit remained tight, measures such as the Funding for Lending Scheme (FLS), are expected to ease credit conditions in the private sector.
Elsewhere, the report said the outlook for the wider European Union remains fragile, but a gradual return to growth is projected for 2013.
Employment in the region is expected to remain high.
The EC said GDP is set to contract by 0.3% in the EU and 0.4% in the eurozone in 2012, while it should grow at 0.4% in the EU and 0.1% in the euro area the following year.
Olli Rehn, EC vice-president for economic and monetary affairs and the euro, said: "Major policy decisions have laid the foundations for strengthening confidence. Market stress has been reduced, but there is no room for complacency.
"Europe must continue to combine sound fiscal policies with structural reforms to create the conditions for sustainable growth to bring unemployment down from the current unacceptably high levels."
- 1 Katie Hopkins attacked me on Twitter — so I reported her to the police for inciting racial hatred
- 2 I might be an MP, but that doesn't stop me fighting sexism with my breasts
- 3 Martha Stewart accuses Snoop Dogg of 'smoking for four hours' during Justin Bieber Roast
- 4 Google April Fools': company unveils backwards search engine and huggable digital assistant
- 5 April Fools' Day 2015: The best hoax news stories from around the internet
Martha Stewart accuses Snoop Dogg of 'smoking for four hours' during Justin Bieber Roast
April Fools' Day 2015: The best hoax news stories from around the internet
April Fools' Day 2015 live: The best pranks and fake stories from around the world
University of Cambridge: Remains of 1,300 scholars are found under building
Turkey power cut: Prime Minister says nationwide blackout could be caused by terrorists
Ukip supporters are 55 or older, white and socially conservative, finds British Social Attitudes Report
Street preacher quoting from the Bible fined for calling homosexuality an 'abomination'
Woman filmed launching racist tirade against men on the Tube for speaking in 'own lingo'
Katie Hopkins attacked me on Twitter — so I reported her to the police for inciting racial hatred
The West has it totally wrong on Lee Kuan Yew
David Cameron calls Labour 'hopeless, sneering socialists' while announcing 7-day NHS plans
£24500 - £28000 per annum: Recruitment Genius: This is an exciting opportunity...
£21000 - £25000 per annum: Recruitment Genius: A bookkeeper/receptionist posit...
£28500 - £30000 per annum: Recruitment Genius: This company offers unique corp...
£20000 - £22000 per annum: Recruitment Genius: This world leader in the design...