Business

Budget 2015: Budget surplus delayed by a year

Chart showing borrowing forecasts

Chancellor George Osborne has delayed his promised budget surplus by a year.

The Office for Budget Responsibility's (OBR) forecasts now predicts a surplus of £10.0bn in 2019-20.

In March, the OBR forecast a surplus of £5.2bn in 2018-19, but that has now been revised to a £6.4bn deficit.

The OBR had described the March Budget plans as a rollercoaster rise because of the cuts in the first two years of the parliament and increased spending in the last two years.

The plans have now been smoothed, with more borrowing in each of the three years following 2015-16.

International organisations such as the OECD had suggested that the government's plans should be smoothed.

In 2016-17, the predicted deficit is up from £39.4bn to £43.1bn, while in 2017-18 it has gone up from £12.8bn to £24.3bn.

Mr Osborne told the House of Commons that his economic aims could be "achieved without a rollercoaster ride", describing his new plans as a "smoother rise to the same destination".

The forecast for the deficit in the current financial year has been cut from £75.3bn to £69.5bn.

Mr Osborne had already cut back the pace of his deficit-cutting in the March Budget, when the surplus in 2019-20 was revised down from £23.1bn to £7.0bn.

In its commentary on the Budget, the OBR said: "The new government has used its first Budget to loosen significantly the impending squeeze on public services spending that had been pencilled in by the coalition in March."

"This is being financed by welfare cuts, net tax increases and three years of higher government borrowing."

There were only moderate changes to the OBR's forecasts of economic growth, which has gone down from 2.5% to 2.4% this year. It is unchanged at 2.3% in 2016, rising from 2.3% to 2.4% in the following two years.

The OBR forecast a rise of one million in the number of people employed in the next five years, but Mr Osborne said he aimed to double that.


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