Osborne denied his overall focus on cutting public spending might hurt Britain’s attempts to prevent attacks like the ones seen in Paris earlier this month, saying spending on anti-terrorism defenses would be increased by nearly a third.
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Osborne will deliver his so-called autumn statement, or budget update, next Wednesday alongside a spending review that is expected to unleash savage deficit-slashing cutbacks.
These amounts mean Chancellor George Osborne must control borrowing to GBP15bn between April and now. The data “extinguish any lingering hope that the chancellor will be able to soften his austerity plans materially”, he said.
He said: “Barring revisions, borrowing would have to be an implausible 48% lower year-over-year in the second half of this fiscal year in order for the current official forecast to be met”.
“However, how much of a compromise can we realistically expect to be offered, given that the Government’s full year target for the reduction in United Kingdom borrowings is now unlikely to be met?”
Local government borrowing, responsible for much of the overshoot this year, can be subject to large revisions.
“Increasingly there are some big risks and unknown factors…we still need to find substantial savings each year to balance the budget on an unprecedented scale”, it says.
The association is urging the government to address “this crisis” in its Spending Review.
Most significantly, the publication noted that industry insiders are indeed predicting some form of tightening of mortgage regulation to be announced with George Osborne’s Autumn Statement, due tomorrow. The proposed slashing would have taken £4.4bn out of spending on working tax credit and child tax credit but Prime Minister David Cameron has been avoiding the subject.
One possibility, according to Investec, is that weaker- than-forecast inflation will lead the OBR to cut its estimate of the cost of paying interest on index-linked gilts.
Central government spending increased to £402.6bn by 1.1%. Revenue was depressed as the Treasury received less in gilt-coupon payments from the Bank of England’s Asset Purchase Facility.
“The government has said it will increase the personal allowance, raise the 40p threshold and align national insurance with income tax”.
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Osborne has tabled a plan to eliminate the deficit and have the United Kingdom in a budget surplus of around GBP10.0 billion by 2020, but these figures will put this target in doubt.
