Treasury must find extra 15bn, says the Item Club

CHANCELLOR Alistair Darling will have to find another &pound;15bn of spending cuts or tax hikes if the Treasury is to meet the projections for public borrowing set out in the 2009 Budget, an Ernst &amp; Young Item Club report will say today.<br /><br />The report comes ahead of next week&rsquo;s pre-budget report, in which Darling is expected to outline his proposals for bringing some credibility back to Britain&rsquo;s public finances.<br /><br />The forecast suggests that a further &pound;15bn tightening will be needed between 2011 and 2013 just to meet the Treasury&rsquo;s existing projections for public borrowing. Getting it well below &pound;100bn by 2013-14 would need a fiscal tightening of &pound;30bn or more, it says.<br /><br />Peter Spencer, chief economic advisor to the Ernst &amp; Young Item Club said: &ldquo;The UK&rsquo;s fiscal reputation is on notice &ndash; given the size of the deficit, action is needed. A key issue, however, in designing the post-election fiscal strategy is the impact that the sizeable policy tightening will have on the strength of the economic recovery.&rdquo;