George Osborne is aiming to turn a current deficit of £80bn into a surplus of £10.1bn
(
PA
)
George Osborne is set to miss his target of putting the public finances into surplus by the end of the decade according to the latest forecasts by the National Institute of Economic and Social Research.
The Chancellor is aiming to turn a deficit of around £80bn this financial year into an absolute surplus of £10.1bn in 2019-20. But NIESR says that under its updated growth and spending forecasts the overall budget will still be in deficit by around £600m in that financial year.
NIESR also noted that if the official forecasts by the Office for Budget Responsibility moved in the same direction as its own at the time of the March Budget, the Chancellor’s “fiscal mandate” would compel Mr Osborne to tighten fiscal policy in response “whether or not this is an optimal response”. This could mean further spending cuts or tax rises.
Business news: in pictures
Business news: in pictures
1/5
Iconic British car maker Jaguar Land Rover warned on July 5, 2018 that a "bad" Brexit deal could jeopardise planned investment of more than $100 billion, upping corporate pressure as the government heads into crucial talks.
AFP/Getty
2/5
Spotify traded publically for the first time on the New York Stock Exchange on Tuesday. However, the company isn't issuing shares, but rather, shares held by Spotify's private investors will be sold
AFP/Getty
3/5
The deadline to award a contract to make blue British passports after Brexit has been extended by two weeks following a request by bidder De La Rue. The move comes after anger at the announcement British passports would be produced by Franco-Dutch firm Gemalto when De La Rue’s contract ends in July.
The British firm said Gemalto was chosen only because it undercut the competition, but the UK company also admitted that it was not the cheapest choice in the tendering process.
4/5
Phillip Rasmussen, finance chief of technology company IQE, was killed in an accident while on holiday over the weekend. The company confirmed the 47 year old man had died while cycling in Menorca. A 25-year-old American man was arrested on suspicion of drink driving, after failing a roadside breath test.
5/5
The Beast from the East wiped £4m off of Flybe’s revenues due to flight cancellations, airport closures and delays, according to the budget airline’s estimates. Flybe said it cancelled 994 flights in the three months to 31 March, compared to 372 in the same period last year.
1/5
Iconic British car maker Jaguar Land Rover warned on July 5, 2018 that a "bad" Brexit deal could jeopardise planned investment of more than $100 billion, upping corporate pressure as the government heads into crucial talks.
AFP/Getty
2/5
Spotify traded publically for the first time on the New York Stock Exchange on Tuesday. However, the company isn't issuing shares, but rather, shares held by Spotify's private investors will be sold
AFP/Getty
3/5
The deadline to award a contract to make blue British passports after Brexit has been extended by two weeks following a request by bidder De La Rue. The move comes after anger at the announcement British passports would be produced by Franco-Dutch firm Gemalto when De La Rue’s contract ends in July.
The British firm said Gemalto was chosen only because it undercut the competition, but the UK company also admitted that it was not the cheapest choice in the tendering process.
4/5
Phillip Rasmussen, finance chief of technology company IQE, was killed in an accident while on holiday over the weekend. The company confirmed the 47 year old man had died while cycling in Menorca. A 25-year-old American man was arrested on suspicion of drink driving, after failing a roadside breath test.
5/5
The Beast from the East wiped £4m off of Flybe’s revenues due to flight cancellations, airport closures and delays, according to the budget airline’s estimates. Flybe said it cancelled 994 flights in the three months to 31 March, compared to 372 in the same period last year.
The Government’s fiscal mandate, which compels the Government to aim to run a surplus in 2019-20 and in each subsequent year “in normal times”, has been criticised by many independent economists for failing to distinguish between current spending and capital spending.
NIESR expects UK GDP to grow by 2.3 per cent in 2016, up from 2.2 per cent in 2015 and rising to 2.7 per cent in 2017. The forecasting body also pushed back the expected date of the Bank of England’s first UK interest rate rise to the second half of 2016. But it added: “There remain a number of factors which indicate that commencing with interest rate rises soon would not be inconsistent with meeting the [Bank’s] remit over the medium term”.
NIESR expects a slight pick-up in the global economy this year, with growth rising to 3.2 per cent, up from 3 per cent in 2015. It said lower oil prices should boost net global demand.
Comments
Please be respectful when making a comment and adhere to our Community Guidelines.
Community Guidelines
You can find our Community Guidelines in full here.