The UK Government will still be in the red at the end of the decade, according to the International Monetary Fund (IMF).
The global body said that “continued steady growth” was expected by the “solid” British economy, but predicted a poorer performance than the UK’s Office for Budget Responsibility (OBR), the Financial Times reported.
Lower tax revenues and a need for greater public spending mean that the UK Government will still have a deficit of £7bn in 2019-20, the IMF predicted in its Fiscal Monitor. However this would be down from the current Government debt of £90bn.
The Chancellor George Osborne has predicted a surplus of £7bn in 2019-20 and the Conservatives’ general election manifesto says that the deficit will “move into surplus [in 2018-19], with the Government taking in more than it is spending for the first time in 18 years”.
“Given uncertainties pertaining to the May elections, a slightly slower pace of [debt] consolidation than that in the Budget is assumed for 2016-17 and beyond,” the IMF said.
The Fiscal Monitor’s figures are based on the OBR’s numbers, but these are adjusted for “differences between IMF staff forecasts of macroeconomic variables and the forecasts of these variables assumed in the authorities’ fiscal projections”.
The Conservatives said the IMF’s predictions were less reliable than those made by the OBR.
“The independent OBR forecasts that the UK will be back in surplus by 2018-19 and the IMF says the UK will have the second fastest growth in the G7 this year and next year,” the party told the FT.
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