Osborne faces calls for fresh round of austerity

CHANCELLOR George Osborne may have to unleash a fresh round of austerity measures in order to bring the UK’s budget deficit under control, a respected think tank will warn today.

Fresh forecasts show the UK’s debt mountain will only fall to £100 billion in 2015-16 from £122bn this year, according to the Centre for Economic & Business Research (CEBR).

That £100bn debt pile would be more than double the £46bn prediction for 2015-16 from the independent Office of Budget Responsibility set up by the coalition government.

Sign up to our daily newsletter

The i newsletter cut through the noise

The forecast was based on “cautious growth assumptions” for the economy, which showed the Chancellor’s debt-to-gross domestic product ratio would “flatline” at about 80 per cent.

Douglas McWilliams, CEBR’s chief executive, said: “This might pass the bond market test but means walking quite close to the cliff edge at a time when the gusts of winds are variable. Further cuts in spending may be necessary.”

The warning came as 55 per cent of small firm owners said they were worried that a eurozone collapse will hit their business, according to a survey by business services provider XLN.