George Osborne warned UK will miss key debt targets - UK Politics - UK - The Independent

George Osborne warned UK will miss key debt targets

Chancellor urged to scrap cuts agenda after IMF warns deficit target is likely to be missed

The Chancellor will miss one of his key fiscal targets, the International Monetary Fund warned yesterday, prompting calls for the Government to adopt a Plan B on the economy.

In June 2010 , George Osborne gave himself a "fiscal mandate" to ensure that national debt as a share of GDP is falling by 2015-16. But in its annual report on the health of the UK economy, the IMF said Britain's national debt will still be rising by then.

Embarrassingly for Mr Osborne, the IMF said that government debt will peak at 79.7 per cent of GDP in 2015-16, and will not start to fall until 2016-17.

"Under [our] staff's weaker medium-term growth projections, the net debt target is expected to be met one year late," it said.

If the IMF's forecast is correct, Mr Osborne is facing a very difficult choice. He can either scrap the national debt target, which would be a political embarrassment, or he can impose greater cuts and tax rises in an attempt to get back on track. The latter would almost certainly further weaken an economy suffering its second recession in three years.

The Shadow Chancellor, Ed Balls, said that the latest forecast was further evidence that the Government's Plan A for the economy had failed.

"They say that weak growth means the Government will miss its debt target and that the Chancellor's existing policies risk causing permanent damage to the British economy" he said.

The IMF urged the Chancellor to scrap his pledge. "A delay [on meeting the national debt target] should be accommodated," it said.

Cutting the national debt by the end of the Parliament was only one half of the Chancellor's fiscal mandate. The other target was to eliminate the deficit by 2016-17. The IMF said that the Government is on course to achieve this, but only by the narrowest of margins. It forecast that the budget will be in surplus by just 0.1 per cent of GDP in 2016-17, against the Office for Budget Responsibility's forecast of a 0.5 per cent surplus. Even a small growth downgrade would put the Government on course to miss that target too.

The IMF also repeated its call from May for the Government to slow down the pace of its planned cuts next year to support the economy if growth does not pick up, recommending higher infrastructure spending and tax cuts.

It also welcomed the additional £50bn of money printing by the Bank of England and the Government's new Funding for Lending Scheme to get credit to hard-pressed British firms and households.

The Treasury stressed that the IMF still described the Government's plans as "appropriate" and welcomed its support for credit-boosting schemes.

Ministers are, nevertheless, resigned to the fact that growth will remain weak and spending cuts will be extended far longer than they initially planned.

David Cameron said in an interview this week that he "does not see a time" when the austerity programme will end.

Suggested Topics
News
Paper trail: the wedding photograph found in the rubble after 9/11 – it took Elizabeth Keefe 13 years to find the people in it
newsWho are the people in this photo? It took Elizabeth Stringer Keefe 13 years to find out
Arts and Entertainment
Evil eye: Douglas Adams in 'mad genius' pose
booksNew biography sheds light on comic genius of Douglas Adams
Sport
FootballFull debuts don't come much more stylish than those on show here
News
i100
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebooksAn unforgettable anthology of contemporary reportage
Life and Style
Kim Kardashian drawn backlash over her sexy swimsuit selfie, called 'disgusting' and 'nasty'
fashionCritics say magazine only pays attention to fashion trends among rich, white women
Arts and Entertainment
TVShows like Agents of S.H.I.E.L.D are little more than marketing tools
Arts and Entertainment
Hit the roof: hot-tub cinema east London
architectureFrom pools to football pitches, rooftop living is looking up
Travel
travel
News
The ecological reconstruction of Ikrandraco avatar is shown in this illustration courtesy of Chuang Zhao. Scientists on September 11, 2014 announced the discovery of fossils in China of a type of flying reptile called a pterosaur that lived 120 millions years ago and so closely resembled those creatures from the 2009 film, Avatar that they named it after them.
SCIENCE
Life and Style
tech
Arts and Entertainment
Matisse: The Cut-Outs exhibition attracted 562,000 visitors to the Tate Modern from April to September
art
Life and Style
Models walk the runway at the Tom Ford show during London Fashion Week Spring Summer 2015
fashionLondon Fashion Week 2014
News
Kenny G
news
News
peopleThe black actress has claimed police mistook her for a prostitute when she kissed her white husband
Life and Style
techIndian model comes with cricket scores baked in
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Energy Markets Analyst

£400000 Per Annum: The Green Recruitment Company: Job Title: Energy Markets An...

Junior Web Analyst – West Sussex – Up to £35k DOE

£30000 - £35000 Per Annum Plus excellent benefits: Clearwater People Solutions...

Nursery Manager

£22000 - £23000 per annum: Randstad Education Bristol: We are currently recrui...

Web Analyst – Permanent – Up to £40k - London

£35000 - £40000 Per Annum: Clearwater People Solutions Ltd: We are currently r...

Day In a Page

Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam
'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

Exclusive extract from Janis Winehouse's poignant new memoir
Is this the role to win Cumberbatch an Oscar?

Is this the role to win Cumberbatch an Oscar?

The Imitation Game, film review
England and Roy Hodgson take a joint step towards redemption in Basel

England and Hodgson take a joint step towards redemption

Welbeck double puts England on the road to Euro 2016
Relatives fight over Vivian Maier’s rare photos

Relatives fight over Vivian Maier’s rare photos

Pictures removed from public view as courts decide ownership
‘Fashion has to be fun. It’s a big business, not a cure for cancer’

‘Fashion has to be fun. It’s a big business, not a cure for cancer’

Donatella Versace at New York Fashion Week