BRITISH public finances worsened in November, meaning that Tory Chancellor George Osborne will spectacularly fail to hit his budget deficit target for this year and will have to impose savage new cuts.
Headline public borrowing rose to £14.2 billion, 10 per cent higher than the same month last year and way above the median forecast of £11.8 billion. Meanwhile, families have racked up as much as £40bn worth of debt this year, fuelling fears that the UK’s so-called ‘economic growth’ is based on soaring levels of debt and will result in a new crash.
The forecast by the independent Office for Budget Responsibility (OBR) of unsustainable levels of borrowing and household spending has led to warnings that the UK is heading towards a credit crunch deeper then the 2008 crash.
Five years ago UK households were firmly in the black, running a surplus of £70bn as Britons tightened their belts in the wake of the financial crash and put money aside to save. Now families are £40bn in the red!
Seema Malhotra, Labour’s shadow Chief Secretary to the Treasury, said: ‘George Osborne is relying on millions of British families going further into debt to hit his growth targets. This is risky behaviour from a Chancellor whose policy decisions are hurting not helping British families.
‘Alarm bells should be ringing. There is a real risk that millions of families will face serious hardship if interest rates start to rise.’ Meanwhile rents are forecast to increase at such a rate that they will outstrip soaring house prices, surveyors have warned.
The Royal Institution of Chartered Surveyors (Rics) warned yesterday that rents are likely to increase by 25 per cent over the next five years, at a rate of five per cent per year. House prices, it predicts, will rise by 4.7 per cent a year.
Rics said: ‘Although housing has climbed the policy agenda, with supply issues dominating the private housing market, our forecast suggests that the likely increase in prices in 2016 will outstrip any rise in household income.’
In a special report about the housing crisis Rics concluded:
• House prices in the UK will see an average increase of six per cent over the course of next year, according to the RICS housing forecast for 2016
• Supply shortfall to continue pushing prices higher
• Transactions to edge up to between 1.25 and 1.3 million (from 1.22 million in 2015)
• Government initiatives hold out the prospect of a further material uplift in the development pipeline.