U.K. citizens are likely to face another ten years of austerity as the government struggles to bring down the national debt level, said a leading economics think-tank on Tuesday, calling it “almost impossible” for Britain to maintain its AAA credit rating status despite government pledges to the contrary.
According to the Centre for Economics and Business Research (CEBR), the U.K.’s debt to GDP ratio is expected to rise to 85 percent within the next five years; while the nation’s deficit is also forecasted to reach £68 billion ($109.3 billion) – double the government’s prediction – by 2017-2018.
Accordingly, efforts to balance the budget may have to be extended beyond the 2020 general elections, stretching to 2023, said the London-based research group, resulting in increased borrowing costs and continued austerity policies.
“Weak economic growth will hold back the deficit-reduction program over the coming years,” said CEBR economist Scott Corfe in an email to Bloomberg. “The deficit-reduction program will stretch into not just the next parliament, but into the one after that,” Corfe added.
“[Subsequently] It will be almost impossible for the UK to maintain its triple-A status in the light of this forecast,” noted CEBR chief economist Douglas Mc-Williams, according to the Daily Mail.
After coming to power in May 2010, U.K. Chancellor George Osborne pledged to eradicate the budget deficit within five years, though he was forced to revise the forecast until 2018 last month. Additionally, in its 2010 election manifesto, the coalition government had promised to “safeguard Britain’s credit rating with a credible plan to eliminate the bulk of the structural deficit over a parliament.”
The CEBR forecast as such comes as a devastating blow for the government who have had to backtrack on numerous economic promises. CEBR blamed the government’s failure to cut public spending - which grew by 2.8 percent in 2012 – as one of the primary shortcomings.
“There seems to have been a setback in reducing public spending despite alleged austerity,’ said Corfe to the Daily Mail, highlighting that 2013 growth forecast figures 0.5 percent was “likely to be the new normal”.
Standard & Poor’s, Moody’s and Fitch have all put the U.K.’s AAA rating on ‘negative outlook’ with a downgrade widely expected this year.
Ross Walker, an economist at Royal Bank of Scotland, said: ‘I would be surprised if all three of the main ratings agencies had the UK as AAA by this time next year.’