George Osborne has used today's Autumn Statement to reveal that the UK will no longer have a budget deficit by 2018, even though he first set out to do this by 2015.
Osborne told MPs that the Office for Budget Responsibility (OBR), the government's independent watchdog, had upgraded its forecasts on the back of encouraging growth figures to conclude that: "By 2018-19 on this measure, the OBR do not expect a deficit at all. Instead they expect Britain to run a small surplus."
However the chancellor risks looking wildly over-optimistic given his original prediction in 2010 was to close the deficit by 2015, telling MPs in his 2010 Budget Speech: “The formal mandate we set is that the structural current deficit should be in balance in the final year of the five-year forecast period, which is 2015-16 in this Budget.”
He later suggested that the government would meet the target a year earlier.
Osborne also boasted on Thursday that the improving state of the economy meant the UK would fall £9 billion this year to just £111 billion - even though the government was forecast in 2010 to borrow just £60 billion this year.
Tory MPs cheered the chancellor as he revealed that the OBR forecast public sector borrowing would fall to 6.8% of GDP this year (compared to the 7.5% predicted in March) and then fall to "5.6 per cent next year, then 4.4 per cent, 2.7 per cent and in 2017-18, 1.2 per cent".
The Chancellor had good news to tell on growth and was quick to point out the OBR upgraded its 2013 growth forecast from the Budget back in March.
"At the time of the Budget in March, the OBR forecast that growth this year would be 0.6 per cent," he told the Commons.
"Today, they more than double that forecast – and estimate growth will be 1.4 per cent."
But compared to what the OBR was forecasting for growth back in 2010, the picture does not look so good.
Writing on the Huffington Post UK, IPPR senior economist Tony Dolphin said: "At the time of the June 2010 Budget, the Office for Budget Responsibility (OBR) forecast that the economy would grow by 8.2% between 2010 and 2013; the likely outturn, based on the forecasts it published today, is just 2.7% - one-third the expected rate."
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