PUBLIC borrowing is likely to come in around £2.9bn below the latest official forecasts in 2011-12 and £9bn lower by 2016-17, analysis published by the Institute for Fiscal Studies (IFS) estimated yesterday.
However, chancellor George Osborne should be wary of indulging in a spending splurge in next month’s budget – spending would have to be in the region of £20bn or more to add even 0.1 or 0.2 per cent to GDP, and could also risk destroying vital confidence in public finances, the respected think-tank warned.
The IFS also explained a long-term fiscal loosening is impossible because of the risk of a deeper Eurozone recession or even break-up, and the impact of an aging population.
The IFS also worried that the government may lack the will or ability to implement its proposed spending cuts.
“More than £9 of every £10 in planned cuts are still to be made,” said IFS boss Paul Johnson.
