The government’s recently implemented austerity programme may face a significant amount of criticism after new financial forecasts are set to indicate slower growth for the coming fiscal year and borrowing that is more excessive than previously thought.
Chancellor George Osborne’s fiscal budget statement for autumn is expected to reveal that independent economic growth forecasts will be cut by nearly 50%, bringing the economic growth rate to approximately 1%. Despite efforts to increase austerity and promote decreased government dependency, some argue that the Chancellor will be unable to formulate a plan that will prevent economic growth from consistently weakening.
Additional pressure comes from government budget restrictions, rising youth unemployment, a growing euro zone crisis, and the fact that many people are still not convinced by the austerity program. The autumn fiscal statements are managed by the Office for Budget Responsibility (OBR), which was established by Osborne about one year ago to provide accurate forecasts without the hindrance of interference from financial ministers. The OBR is expected to reduce its projected market growth statistics, and forecast a higher level of loan dependency during the next half decade.
Another reason why many are skeptical of the austerity programme is because Chancellor Osborne will be required to meet the coalition’s proposed fiscal targets using an extremely small margin. Meanwhile, constant turbulence in the financial market and lower consumer confidence continue to threaten the credibility of the public financial sector.
However, some economists believe that abandoning the proposed austerity plans at this moment in time could lead to a considerable worsening of the current financial crisis. Being that the budget deficit equaled more than 9% of gross domestic product in the 2010/11 fiscal year, many say that Chancellor Osborne has no other option but to continue forward with the austerity programme.
