Britain’s austerity program may last for more than a decade amid weak economic growth and higher- than-planned public spending, the Center for Economics and Business Research said.
Efforts to balance the budget may have to be extended beyond the 2020 general election, the London-based research group said in a report published today. Net government debt will reach 85 percent of economic output by 2017, costing Britain its top credit rating, and the deficit by then will be more than twice as large as government forecasters predict, it said.
“Weak economic growth will hold back the deficit-reduction program over the coming years,” CEBR economist Scott Corfe said in an e-mail. “The deficit-reduction program will stretch into not just the next parliament, but into the one after that.”
Chancellor of the Exchequer George Osborne said last month austerity will continue until 2018, three years later than planned when the Conservative-led government took power in 2010 and began tackling a record deficit equal to 11 percent of gross domestic product.
CEBR said the deficit won’t fall as quickly as Osborne predicts. By the fiscal year that starts in April 2017, the shortfall will be 68 billion pounds ($109 billion) instead of the 31 billion pounds forecast by the Office for Budget Responsibility, CEBR said.
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