{"id":333446,"date":"2011-03-23T20:33:13","date_gmt":"2011-03-23T20:33:13","guid":{"rendered":"http:\/\/www.ghanamma.net\/2011\/03\/23\/growth-threat-to-debt-forecast\/"},"modified":"2011-03-23T20:33:13","modified_gmt":"2011-03-23T20:33:13","slug":"growth-threat-to-debt-forecast","status":"publish","type":"post","link":"https:\/\/www.ghanamma.com\/2011\/03\/23\/growth-threat-to-debt-forecast\/","title":{"rendered":"‘Growth threat’ to debt forecast"},"content":{"rendered":"

\n \t\t
\n 23 March 2011<\/span>
\nLast updated at <\/span>16:33 ET<\/span>
\n<\/span><\/p>\n

The government’s prediction of a return to fiscal health by 2014-15 hinges on the “unobservable” growth potential of the economy, a think tank has warned.<\/p>\n

The forecast return to surplus in the latest budget is even more dependent on a pick up in growth in 2013, said the Institute for Fiscal Studies (IFS).<\/p>\n

It comes after the Office for Budget Responsibility (OBR) cut its growth projections for the next two years.<\/p>\n

The IFS said the planned cuts over the next four years remain “formidable”.<\/p>\n

The budget was “not a fiscal event” the institute said in its initial response<\/a>, noting that the net impact of the announced tax cuts and spending cuts on the public finances was minimal.<\/p>\n

“Given these forecasts, it is clear why a Chancellor, sticking to his plans, did not feel able to engage in a net giveaway,” said IFS director Paul Johnson.<\/p>\n

“Going forward, he is going to be uncomfortably dependent on the judgments that the (independent) OBR makes over the (unobservable) potential output of the economy.”<\/p>\n

The OBR – whose forecasts the Chancellor has committed himself to use – admitted that the main risk to the government’s finances was “the possibility that we have over-estimated the amount of spare capacity in the economy, now or in the future”. <\/p>\n

For the latest budget, the public finances watchdog cut its growth forecast for the current year to 1.7% from 2.1% previously, and for 2012 to 2.5% from 2.6%.<\/p>\n<\/p><\/div>\n<\/p>\n

Read more:
\n‘Growth threat’ to debt forecast<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

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