Think tank warns Government to control spending

Leading economic think tank, the National Institute of Economic and Social Research (NIESR), is warning the Government that if it plans to halve the budget deficit over the next four years, much tighter spending controls are required.

In his latest Pre-Budget Report, Chancellor Alistair Darling pledged to significantly reduce the UK’s soaring deficit over the next five years, but specific details were not provided as to how he would achieve this.

“Plans for fiscal consolidation will not be sufficient to start bringing down net public debt as a share of GDP by the middle of this decade, as the Treasury expects. Instead it will carry on rising,” it said.

In order to stop the rising national debt, the NIESR believes additional spending cuts or further tax hikes, or a combination of both, will be required.

Meanwhile, the Institute is forecasting net borrowing will be 6.8% of GDP in 2013-14, against official estimates of 5.5%.

The think tank is also warning that UK unemployment could soar to almost three million in the third quarter of 2011.

Official figures have recently shown the first fall in overall unemployment since the onset of the recession, with jobless totals 7,000 lower in the three months to November, at 2.46 million. The unemployment rate also eased to 7.8% from 7.9%.

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