Another Warning On Rising Public Borrowing

(Press Association) – PUBLIC BORROWING will stand at more than £120 billion in four years, even if the next Government takes a bigger knife to spending, a leading think-tank has warned.

Borrowing is likely to hit £165.7 billion this year — 12% of output — and remain at £121.6 billion by 2013/14, said the National Institute of Economic and Social Research (NIESR).

It arrived at the huge figure despite assuming a ‘more aggressive curtailing’ of public sector spending than in its April forecasts.

‘The introduction of a more credible plan to return the public finances to a path of fiscal sustainability remains a necessity,’ NIESR said.

The think-tank forecasts huge spending cuts as well as higher taxes over the next four years as the country labours under the burden of servicing its mammoth debts.

‘With the rapid accumulation of debt under way, debt interest payments are also expected to increase as a share of GDP over the next few years. This suggests that spending on goods and services by the state will have to be squeezed significantly,’ it adds.

The think-tank’s warning echoes recent comments from the Bank of England Governor, Mervyn King, over the need for firmer action on the public finances.

After a 4.3% decline this year, NIESR forecasts growth of 1% next year and 1.8% in 2011 — well below ‘optimistic’ Treasury forecasts.

On Friday official figures are likely to show a much shallower economic decline for the second quarter of 2009, following the UK’s 2.4% slump in the first three months of the year — the biggest in more than 50 years.

NIESR said this was ‘probably the worst quarterly economic performance in the UK since the 1926 General Strike.’

One Response

  1. […] … (22/07/2009) – Another Warning On Rising Public Borrowing […]

Comments are closed.

%d bloggers like this: