The Office for Budget Responsibility (OBR) has forecast that the Government will borrow £86.6bn this fiscal year but with just five months to go, “it appears virtually impossible” that the target will now be reached, said Martin Beck, senior economic adviser to the EY Item Club.
The group also expects borrowing forecasts for future years to be revised upwards, meaning the Chancellor is likely to be told that he won’t be able to deliver a surplus until 2019-20. Mr Osborne will try to draw attention away from the increased borrowing by instead trumpeting upward revisions in GDP growth forecasts.
The OBR predicted in March that the economy would grow by 2.7pc this year. However, economists expect this forecast to be improved to 3pc, possibly to as much as 3.2pc, confirming Britain as the fastest-growing economy in the G7.
“We have turned the UK around from being a basket case, which it was four years ago, to one of the fastest- growing economies in the western world,” Mr Osborne said on The Andrew Marr Show yesterday on BBC1.
The Chancellor insisted that the Government’s plans “don’t involve tax increases” and spending on the NHS and infrastructure would be funded by savings elsewhere. £1bn in fines on banks will go towards improving GP services, the Chancellor said.
“We should be making savings in welfare to spend money on infrastructure, like roads,” he insisted.
The Government will today spell out how it intends to spend £15bn, already promised, on road improvements in England over the next five years.
The projects include tunnelling the A303 at Stonehenge to reduce bottlenecks in the area, as well as adding lanes to trunk roads and motorways.
The Transport Secretary, Patrick McLoughlin, described the investment as the “biggest, boldest and most far-reaching roads programme for decades”. He added: “Roads are key to our nation’s prosperity. For too long they have suffered from underinvestment.”