David Cameron used his speech to the Confederation of British Industry (CBI) to warn that the UK is falling behind its schedule for cutting Britain’s public debt.
The Office for National Statistics (ONS) releases new figures on public borrowing today that are expected to confirm that the government is falling behind on its repayment schedule.
He said that controlling the debt was “proving harder than anyone envisaged”. It is thought that Mr Cameron has been shown the final economic forecasts from the Office for Budget Responsibility that show the UK is unlikely to cut the deficit as per the Chancellor’s schedule.
George Osborne had hoped to cut the public sector deficit by the end of 2014-15 but this now appears to be unlikely and although many economists expected to see the debt clearance target slip to 2015-16, the final year in this term of parliament, it seems likely that the government will not fully cut the deficit until sometime into a second parliamentary term, if they are re-elected.
Mr Cameron said to the CBI: “High levels of public and private debt are proving to be a real drag on growth, which in turn makes it more difficult to deal with those debts.”
This is the first time that the government has admitted that the deficit reduction strategy is behind schedule. However, despite criticism from the Labour Party that this admission means that Mr Cameron and Mr Osborne should admit that they are following the wrong strategy, Mr Cameron told the CBI that he would not be diverted from his plan A.
He said: “People who argue that traditional fiscal stimulus – extra spending funded by even more borrowing – is the right answer are not just wrong, they are dangerously wrong.”
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