Budget: Chancellor 'To Overborrow By £8bn'
The Chancellor will be forced to reveal a downgraded growth forecast and a £8bn borrowing overshoot in this week's Budget, it has been predicted.
The Ernst & Young Item Club said the Office for Budget Responsibility (OBR) was likely to slash its growth forecasts to just under 1% for 2013 from 1.2%, adding to pressure for bolder moves to kick-start the economy.
Weak income tax receipts, disappointing revenues from the sale of the 4G spectrum and a lower-than-expected boost from the Bank of England's asset purchase programme were also expected to see the OBR reveal that public borrowing has climbed to more than £88bn this year, it added.
Senior economic adviser Andrew Goodwin said the forecasts would be politically "embarrassing" and said it was time for a "bold move" from the Chancellor.
The negative prediction comes just two days before George Osborne delivers his latest Budget.
The Item Club report is calling for spending on a £10bn package of infrastructure projects in each of the next two years, even if this would require more borrowing.
A defiant George Osborne resisted pressure for a switch from his tight austerity measures yesterday as he warned there were "no easy answers" to the UK's economic woes.
The prediction comes as the Chartered Management Institute (CMI) says bad weather has exacerbated the situation.
The CMI said it was the top cause of disruption to UK businesses over the last 12 months, with as many as 77% of organisations affected by this winter's snow.
It said managers have estimated the average cost to their organisation in excess of £52,000, with some claiming up to £1 million in losses because of the cold.
The CMI added that further disruption was caused to 42% of firms by staff illness, while 40% were hit by IT woes and 27% suffered from transport disruption.
With the UK teetering on the brink of a triple-dip recession and the country's once-cherished AAA credit rating lost, Mr Osborne faces rising demands to abandon his Plan A.
But the Chancellor insisted that failing to tackle the country's debt and deficit problems could leave the UK on the brink of a crisis like that in Cyprus.
He said Wednesday's Budget would contain measures to "help those who aspire to work hard and get on" but would also set out the scale of further curbs on public spending from 2015.
Mr Osborne indicated there would be help with the cost of childcare and announced that a £72,000 cap on the amount people must pay for social care would be brought forward to 2016.
The £144-a-week single state pension will also be introduced a year ahead of schedule in 2016.