Autumn Statement: Bleak borrowing prediction rocks George Osborne’s deficit hopes.

The article stated he was going to borrow an additional £75 billion over the next five years - he has borrowed an additional £7 billion, bringing it up to £75 billion.

£68 billion difference.

The article implied that this was an additional £75 for the next five years, not comparing it to something he said in 2010.....

Also, the "new, bleak fiscal forecast from the OBR" - did they mean the ones that stated

On our central forecast, the Coalition Government is on track to meet its fiscal mandate – to borrow only what it needs to pay for investment, adjusting for the state of the economy, at the end of the five-year forecast – with £50.6 billion to spare. This implies an 80 per cent probability of success given the accuracy of past forecasts. It remains on course to miss its supplementary target, to have net debt falling as a share of GDP in 2015-16. Net debt is forecast to rise by 0.8 per cent of GDP in that year, where it peaks at 81.1 per cent

It's not good that we aren't going to meet the supplementary target, but not sure how meeting the main target is "bleak".....

Some more 'bleak' snippets from the report (which also shows some negative points as well).

In headline terms, the UK economy has outperformed our March forecast, with GDP expected to grow by 3.0 per cent this year and unemployment already down to 6.0 per cent.

GDP has increased more strongly this year than we expected in March, which has led us to increase our forecasts for growth in calendar years 2014 and 2015

We have also revised our inflation forecast down significantly, due to lower-than-expected outturns in recent data and the effects of lower oil and food prices. We now expect CPI inflation to remain below the Bank of England’s 2 per cent target until 2017. Meaningful real wage growth is expected to resume in 2015, although the measure of real earnings in our forecast does not return to its pre-crisis level within the next five years

On the Government’s latest plans and medium-term assumptions, we are now in the fifth year of what is projected to be a 10-year fiscal consolidation. Relative to GDP, the budget deficit has been halved to date, thanks primarily to lower departmental spending (both current and capital) and lower welfare spending.

In our first formal assessment, we judge that the Government is on course to keep spending on social security and tax credits (excluding the state pension and those benefits that vary most with the state of the economy) within the permitted margins of the ‘welfare cap’ it set in the Budget.


And for a bit of light relief...

Parliament requires that our forecasts reflect the current policies of the current Government, but those policies could change. The two member parties of the Coalition have already said that they would follow different policies if either was to govern alone after the election. The Conservatives have said they would look to cut welfare spending by more, so that they could cut public services by less. And the Liberal Democrats have said that they would be willing to borrow more to finance capital spending that would increase growth, and also to increase taxes on the relatively well-off.

Labour has said that it would "balance the books and deliver a surplus on the current budget and falling national debt in the next Parliament. How fast we can go will depend on the state of the economy and the public finances we inherit."

[Osem]

Doesn't sound so 'bleak' or 'chaotic' when you put it like that...

On balance I'd prefer that to Balls' version of Brown's 'prudence'.

[Mr Angry]

Thanks for that Hugh. The fact remains though that he will borrow, in the next year nevermind five years, £75bn more that he forecast he would be required to do to address the deficit in this parliament (which was his own target).

Originally Posted by Mr Angry

Thanks for that Hugh. The fact remains though that he will borrow, in the next year nevermind five years, £75bn more that he forecast he would be required to do to address the deficit in this parliament (which was his own target).

No, if I'm understanding the graph properly, he is saying he will borrow £75.9 billion next year whereas he previously forecast he would borrow £68.7 billion.

That is not "£75 billion more than he forecast". It is £7.2 billion more than forecast. He has required, very roughly, about 10% more borrowing than he forecast. Given the already vast size of our national debt pile, and the fact that Labour would cheerfully have borrowed rather a lot more than this in order to 'stimulate' the economy, I really don't think this is the howling great piece of incompetence the Tory hat3rz want it to be.

I think what Mr. A is pointing out is that in 2010, the Chancellor said the budget would be balanced (so no borrowing required) - instead, the facts are he is borrowing £75 billion.

Two different ways of looking at it...

[Mr Angry]

Originally Posted by Chris

No, if I'm understanding the graph properly, he is saying he will borrow £75.9 billion next year whereas he previously forecast he would borrow £68.7 billion.

That is not "£75 billion more than he forecast". It is £7.2 billion more than forecast. He has required, very roughly, about 10% more borrowing than he forecast. Given the already vast size of our national debt pile, and the fact that Labour would cheerfully have borrowed rather a lot more than this in order to 'stimulate' the economy, I really don't think this is the howling great piece of incompetence the Tory hat3rz want it to be.

Thanks for that Chris. I'm still somewhat unclear about this.

According to the Telegraph in 2010 Mr Osborne stated that he would commit to a mandate of removing the structural current deficit - which adjusts for the effect of the economic cycle and ignores investment spending - and start cutting into the national debt by 2015/16. However, he added that he would achieve this goal a year earlier than expected. The emergency Budget committed to some £40bn of annual cuts in the deficit by the final year of the Parliament, on top of the £73bn inherited from the previous Government.

As far as I can tell, and I'm happy to be advised to the contrary, he has managed neither of these stated goals and is continuing to borrow in an ongoing attempt to do so.

Therefore is it not a fair point made by the independant and others that this is additional borrowing beyond that which the chancellor obviously thought he required back in 2010 to honour his undertakings?

EDIT:

Sorry Hugh, I was posting as you posted. Yes, that's my line of thought on it - thanks for condensing and clarifying for me. I was getting bogged down trying to explain. As I said, not my forte. Thanks, sir.

Well it depends which forecast you want to refer back to. As Hugh pointed out, it transpires that if you go back to 2010, he did indeed predict he could balance the books by next year, and in that case, borrowing in 2015 will be £75 billion higher than predicted in 2010.

However, that forecast has long been superseded. Nobody today has been stunned by borrowing £75 billion higher than they were expected. Everyone has known for years that the books would not be balanced next year. Osborne has acknowledged that. Referring back to a forecast made in 2010 and abandoned (IIRC) in 2012 is just political posturing for the gallery by a shadow chancellor who has nowhere else to turn.

[Mr Angry]

It wasn't a forecast Chris, it was a committment. His first committment as Chancellor.

You're quite right, nobody is stunned at the Government having to borrow an additional £75bn - we're used to the financial incompetence and chaos of the current and past administrations.

Irrespective of what Balls or anyone else may or may not say the fact remains that that the target, whether superseded or not, was missed and, in all probability, was most likely never achievable by even the most optimistic of measurements.

That said, I'm not defending Balls or any other Government official, I'd just like to be clear about that.

Blue, red or yellow none of them have the ability to quickly resolve the countries problems because none of them have the courage to do what's needed and all of them always have one eye fixed on the next election. Osbourne has not been a good chancellor at all just because he may have been better then a worse option doesn't make him good, he's failed on everything he said in 2010 and I have zero reason to take him anymore seriously now. What were seeing is the fundamental flaw in our political system and no I don't know how to fix it but it would be good if those with the power at least started too.

[Ignitionnet]

Originally Posted by RizzyKing

Blue, red or yellow none of them have the ability to quickly resolve the countries problems because none of them have the courage to do what's needed
....

What were seeing is the fundamental flaw in our political system and no I don't know how to fix it but it would be good if those with the power at least started too.

What is needed?

To just do the cuts in one phase covering no more then one parliament people can handle things a lot better if they know exactly how long the pain is going to last rather then this drip drip approach and I'd much prefer he just cut welfare to the extent he wants too in one go so I can then work things out and decide a course of action. We all know welfare is going to get hammered just get it over with instead of making every claimant worry all the time.

[Ignitionnet]

Originally Posted by RizzyKing

To just do the cuts in one phase covering no more then one parliament people can handle things a lot better if they know exactly how long the pain is going to last rather then this drip drip approach and I'd much prefer he just cut welfare to the extent he wants too in one go so I can then work things out and decide a course of action. We all know welfare is going to get hammered just get it over with instead of making every claimant worry all the time.

Had they done that they'd have never had any chance of re-election. They'd also have devastated economic growth.

A slower approach to deficit recovery was required. The big thing that annoys me is that it took so long for them to realise that investment in capital expenditure was important having completely butchered it because it was politically expedient back in 2010.

I don't object to cuts per se, I object to where they were made and the rhetoric surrounding them. I'm also far from convinced that 88% cuts and 12% tax rises is the right ratio.

While previous generations' politicians completely failed to save for the ageing of a big demographic bulge and the current generation are going out of their way to save said generation from cuts where possible to gut the services some of the current working age population rely on while carrying on the current rhetoric is churlish.

It's all bs and has been for a while we have growing problems that at best get temporary patches but we all know welfare is going to be hit so hit it and be done that won't cause too many problems as most of the public will cheer in the streets.