LESS GOVERNMENT SECTOR JOB LOSSES THAN EXPECTED, SAYS ITEM REPORT

GOVERNMENT sector job losses have been overstated, according to a report out today.

The Ernst and Young Item Club (Item) expects job cuts of 400,000 across this parliament, below current estimates of 490,000.

The revision is due to greater savings from welfare reform, leaving more funds for Whitehall budgets.

Departmental spending will be £11bn higher than set out in June’s emergency Budget, the report says.

The Item report expects the government to better its deficit target for 2010 by £10bn, largely due to increases in revenue from corporation tax, VAT and income tax.

It adds business investment is at least two per cent higher than expected this year, despite government projections of a half per cent fall.