Osborne ‘will fail to eliminate deficit 
by 2015’

Chancellor George Osborne will also fail in his economic goal to stem the increase in public debt before the next General Election, according to the Centre for Policy Studies (CPS).

The CPS said in a report: “The Coalition came into office in 2010 with the stated aim that it would eliminate the current structural deficit within five years and stem the increase in public debt as a proportion of GDP. It is not achieving these aims.

“Though it correctly asserts that the deficit has fallen by around a quarter since 2010, the cyclically-adjusted current deficit (the part it said it wanted to eliminate within five years), had only fallen by 13.2 per cent by the end of 2011/12.”

The study found most of the reduction in the deficit came from cuts to investment and tax increases rather than public spending cuts.

The Right-leaning think-tank’s report also said official national debt is forecast to rise by £605bn over the course of this Parliament, or from 53 per cent of GDP in 2009/10 to 76 per cent of GDP in 2014/15, despite the deficit falling.

“This week’s growth and borrowing figures make it all the less likely that debt will be on a downward path until the next Parliament, meaning the Coalition’s hard mandate will not be met on unchanged policy,” the study added.

The Government’s problems are exacerbated by the fact that the difference between “deficit” and “debt” is still widely misunderstood by the public, it added.

Ryan Bourne, one of the report’s authors, said: “It’s becoming increasingly probable that, on current policy, neither of the Coalition’s original fiscal mandates are going to met.”

The Treasury rejected the CPS analysis.

“The Independent Office for Budget Responsibility’s most recent assessment is that the Government is broadly on track to meet its debt and deficit targets,” a spokesman said.