On 3 December, UK Chancellor George Osborne will deliver his annual Autumn Statement to Parliament, based on the
latest forecasts from the Office for Budget Responsibility. But with public debt levels remaining high, many are sceptical about the outcome.
Cause for concern?City A.M. offers two views on this. Adam Memon, Head of Economic Research at the Centre for Policy Studies, says we should wait for Osborne to give his Autumn Statement before casting judgment on the country's fiscal trajectory. While Memon acknowledges that deficit reduction is occurring at a slower rate than many would like, he cannot see cause for panic - at least, not yet.
£200m
The amount public borrowing fell in October compared to the same period last year
He explains that public borrowing in October fell £200m to £7.7bn compared to the same period last year and "although there has been an increase in the current budget deficit of £500m in the year to date, this has coincided with a £3.2bn increase in net public investment".
On the other hand, David Kern, Chief Economist at the British Chambers of Commerce, has several concerns. According to Kern, the deficit has remained "unsustainably large" since the financial crisis and October's figures suggest "the Government's plan to reduce Britain's deficit in the current financial year is unlikely to be realised". His greatest qualm is with the negative impact on the UK's international credibility, where damaged credit ratings could increase interest payments on national debt.
City A.M. opinion Backward steps The Guardian's Larry Elliott takes a harsher view, with claims that the Chancellor's deficit reduction plan hasn't just dropped back a gear; it has "gone into reverse". What's more, Osborne's ongoing references to economic turbulence throughout the rest of the world are simply a way of creating a "smokescreen" to disguise this fact, says Elliott.
When the Government came to power four years ago, it anticipated borrowing £40bn in the current financial year, but Elliott points out that the figure now looks to be something like £100bn. Come Wednesday, the Treasury might insist that its deficit reduction plan is working, but as far as his blog is concerned, "it isn't".
The Guardian blog "Needless burden"Richard Cree of
economia, the member publication for the Institute of Chartered Accountants in England and Wales (ICAEW), asks whether we need an Autumn Statement at all.
"This interim report had been valuable for the Government during the financial crisis, but by 2010, the general consensus seemed to be that it had become a needless burden on limited Treasury resources," writes Cree. "This time, with a general election months away, it will be even more nakedly political than ever. But public finances are still too delicately balanced and not robust enough to be toyed with by politicians of any persuasion."
He cites ICAEW Chief Executive Michael Izza's recently letter to the Chancellor in which Izza wrote: "The Autumn Statement should put in place policy measures that respond to the challenges of slower economic growth... measures to bring the debt and deficit under control should remain a priority."
Cree describes this as the the sort of sensible financial policy that any Chief Financial Officer would suggest, but added: "With no one performing such a role in government, the temptation to focus on short-term fixes instead may be too great to resist."
economia opinion
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