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Whitehall underspent by £3bn last year - IFS

Posted by admin on Wed, 01/02/2012 - 14:02
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Britain’s economy is heading for slower growth than official forecasts, leaving no room for any giveaways in the Budget, economists have warned.
 
The latest annual Green Budget produced by influential think tank the Institute for Fiscal Studies in collaboration with Oxford Economics, says that the likely disappointing news on the economy in coming weeks would be offset by lower-than-planned public spending.
 
Even relative to major planned cuts, Whitehall Departments will underspend by more than £3bn this year. As a result, the government will borrow slightly less in 2011-12, £2.9bn, than the latest official forecast, the IFS says.
 
“But significant downside risks to the public finances, combined with long-term pressures from an ageing population, suggest that the Chancellor has little scope for a significant permanent fiscal loosening relative to current plans,” the study says.
 

The Chancellor’s Budget will be delivered on 21 March and the IFS says the case for a significant short-term fiscal stimulus to boost the economy is stronger than it was a year ago.

“There seems little prospect that it would prompt an offsetting monetary tightening in the present climate. But a small loosening would be likely to deliver only a small boost to the economy - while a big one might risk undermining investor confidence.”