GDP growth will grind to a halt, the respected economists believe, but one factor keeping the government relatively close to its borrowing targets will be soaring public sector unemployment.
The OBR has been “far too conservative” in estimating losses of 20,000 “general government jobs in 2011/12” the Club believes.
“Just one quarter into the financial year, the number of job losses already stands at 147,000” the report said.
“We would expect to see the OBR increase its estimates of general government job losses between 2012/11 and 2015/16 from around 400,000 to closer to 500,000.”
Meanwhile George Osborne is expected to announce years of pain, with spending cuts into 2017 in his Autumn Statement tomorrow.
The speech is expected to underline the long-term nature of the deficit reduction programme, which has become more difficult thanks to the economic downturn.