Osborne's economy | RBS Invoice Finance

Budget 2016: Osborne's plan for the economy

  • Chancellor pledges to return Budget to surplus by 2020
  • BBC doubts these debt targets

Concern surrounds the Chancellor’s ability to balance the budget with his self-imposed and stringent economic targets. George Osborne has pledged to return the Budget to surplus by 2020. He also plans to keep it in surplus over the next four years, unless economic growth in the UK drops below 1%.

From last year’s Budget, another key promise was to reduce overall debt as a percentage of the UK economy every year until 2020. To pull this off, experts say the Chancellor would need to sell major state assets.

Furthermore, Osborne wants to keep welfare spending to a minimum. It will be capped at £119.5 billion in the 2015-16 financial year, rising to £126.7bn by 2018-19.

However, the BBC argues that the welfare spending targets have already been breached for this financial year. It claims the overall debt targets are not going to be met, and doubts that the Budget will return to surplus by 2020.

Earlier this year, the Chancellor blamed a “dangerous cocktail” of deflation and low global demand for exports for his failure to meet targets. He said,

"It was precisely because we live in an uncertain world, because we have not abolished boom and bust as a nation, that […] I need to go on explaining to the public that the difficult times aren't over."

All this points towards further belt-tightening over the next four years. Austerity is here to stay, as Osborne implied in a recent interview with the BBC:

"We may need to undertake further reductions in spending because this country can only afford what it can afford […] We will address that in the Budget.

"I’m clear we’ve got to root our country in the principle that we live within our means and that we have economic security."

 

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