Osborne to miss own deficit targets

George OsborneGeorge Osborne faces missing his deficit target come the end of November. On the 29th the Office for Budget Responsibility will likely admit that the downturn is rather more serious than predicted.

Crucially it means the part of the UK deficit unaffected by growth, or the structural deficit, will not be wiped out as previously hoped by 2014. Growth is simply not there.

Plan B?

Yesterday The Bank of England slashed its growth forecast for the next year; the OBR's own version can't be dissimilar. That is, growth flat-lining until next summer thanks to weakened consumer confidence, worrying levels of youth unemployment and, of course, the eurozone crisis - several strands, all connected.

Unemployment is a particularly worry. Currently it stands at 8.3% with UK unemployment rising by 129,000 in the three months to September to 2.62 million - the highest since the mid 1990s.

The government is bringing out new incentives to deal with long-term unemployment. But it also wants to fiddle the figures.

All pain no gain

The Guardian reports that the government is lobbying the International Labour Organisation to remove those students in full-time education from the headline total of youth unemployment (286,000 students are included in the data).

The bigger question for economists is trying to establish how much damage the recession has caused. Is it a cyclical hit for the UK, or is it something far more fundamental, more structural? Labour is already claiming the government will have to borrow more - at least £100bn - than originally planned.

If that's the case, where does that leave the £40bn clawed back in spending cuts, public sector jobs lost and large tax rises. It's going to be embarrassing for Osborne. European contagion will likely be blamed, but that's too easy a scapegoat.
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