Moody’s sees a deficit struggle
CHANCELLOR George Osborne may struggle to cut public spending as quickly as planned, according to ratings agency Moody’s.
In a report published yesterday it said that most of the “low hanging fruit”, in terms of efficiency savings and reducing tax evasion, have probably already been picked.
“We expect the budget deficit to decline continuously over the coming year…However, we also believe that the pace of adjustment might be somewhat slower than the government targets, as the planned spending cuts are very substantial,” the report said.
Moody’s believes the UK’s budget deficit will drop to 4.5 per cent of GDP in the year ending March 2016. This would mark a decline from 4.8 per cent in the year ending March 2015.
The government spending watchdog, the Office for Budget Responsibility (OBR), predicted in March that the budget deficit would be four per cent of GDP in the year ending March 2016, based on the government’s spending plans at the time.
The OBR expects the Treasury to break even by 2020.
Osborne will present an amended budget on 8 July, which is expected to provide detail on further savings.