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 I've been called an abusive and dangerous parent, when all I did was listen to my transgender child
- 2 Migrant crisis: Greek soldier saved 20 people singlehandedly off Rhodes beach
- 3 Sofyen Belamouadden murder: The inside story of a crime that horrified Britain
- 4 Company breaks open Apple Watch to discover what it says is 'planned obsolescence'
- 5 Ian Brady: Moors murderer announces his support for Ukip and the SNP
Migrant crisis: Greek soldier saved 20 people singlehandedly off Rhodes beach
Russian hack of President Obama's emails worse than previously admitted
Ian Brady: Moors murderer announces his support for Ukip and the SNP
UK weather: Britain braced for snow to replace sun as arctic air mass moves in
Nepal earthquake: US Pastor Tony Miano sparks outcry by suggesting Nepalis should not rebuild their 'pagan shrines'
General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband
The sickening truth about food banks that the Tories don't want you to know
Migrant boat disaster: Ukip candidate mocks victims in sickening Twitter post
Nigel Farage wants the BBC to stop making programmes like Doctor Who, Strictly Come Dancing, and Top Gear
Global warming: Scientists say temperatures could rise by 6C by 2100 and call for action ahead of UN meeting in Paris
General Election 2015: Britain would become a 'communist dictatorship' under Ed Miliband and Nicola Sturgeon, claims wife of Michael Gove
£26000 - £28000 per annum + benefits : Ashdown Group: Senior Accounts Assistan...
£24000 - £26000 per annum + benefits : Ashdown Group: A highly successful, glo...
£22000 - £40000 per annum: Recruitment Genius: This company is part of a Group...
£16000 - £18000 per annum: Recruitment Genius: Are you a a young, dynamic pers...