Osborne 'will miss deficit target'

The Government is "most unlikely" to meet its target to eliminate Britain's structural deficit by 2015, a think-tank has warned.

Chancellor George Osborne will also fail in his economic goal to stem the increase in public debt before the next general election, according to the Centre for Policy Studies (CPS).

In a report, the CPS said: "The coalition came into office in 2010 with the stated aim that it would eliminate the current structural deficit within five years and stem the increase in public debt as a proportion of GDP. It is not achieving these aims.

"Though it correctly asserts that the deficit has fallen by around a quarter since 2010, the cyclically-adjusted current deficit (the part it said it wanted to eliminate within five years), had only fallen by 13.2% by the end of 2011/12."

The study found that the the majority of the reduction in the deficit has come from cuts to investment spending and tax increases rather than public spending cuts. It said that only 6% of the coalition's planned cuts to current expenditure had so far been implemented. The right-leaning think-tank's report also said that official national debt is forecast to rise by £605 billion over the course of this Parliament, or from 53% of GDP in 2009/10 to 76% of GDP in 2014/15, despite the deficit falling.

"This week's growth and borrowing figures make it all the less likely that debt will be on a downward path until the next Parliament, meaning the coalition's hard mandate will not be met on unchanged policy," the study added.

It said the Government's problems are exacerbated by the fact that the difference between "deficit" and "debt" is still widely misunderstood by the public. A poll found that 47% of people believe that public debt will actually fall by around £600 billion by 2015. Only 39% of people also correctly identified that the budget deficit has fallen since 2010.

Ryan Bourne, one of the report's authors, said: "It's becoming increasingly probable that, on current policy, neither of the coalition's original fiscal mandates are going to met. With the recent dreadful borrowing figures, now would be a good time for the Coalition to restate the scale of our fiscal problems, and to set out how they will be addressed."

He added: "Only by having a clear knowledge of the problems and solutions on offer from the different parties will the electorate be able to make an informed choice in 2015."

The Treasury rejected the CPS analysis. A spokesman said: "The Independent Office for Budget Responsibility's (OBR) most recent assessment is that the government is broadly on track to meet its debt and deficit targets. The OBR will update its forecasts in the autumn."