Politics|

Government to gain £8 billion windfall in 2011

A recent report has said that the Government may gain support for its spending cuts with an £8 billion windfall forecast for the year.

The news comes via a forecast by Ernst & Young’s Item Club, which said that officials may be gaining the upper hand on public spending via £8 billion in funds thanks to lower spending and higher tax revenues. The report’ s authors said that the Government will borrow less this year and should not back down on spending cuts.

The club also added that recent months had seen further progress on the economic recovery and that Government borrowing for this financial year would amount to £140.2 billion, as opposed to the Office of Budget Responsibility’s previous forecast of £148.5 billion. It said that this would mean that Wednesday would see few major policy announcements regarding the Budget.

Item Club senior economic advisor Andrew Goodwin said that the Government’s fiscal plan so far was ‘on track’ however the Treasury needed to not take advantage of the windfall and hold firm to its current plan of deep cuts.

The news comes after Chancellor George Osborne said to the BBC on Sunday that watering down Government spending cuts would be a big mistake.

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