Osborne set to miss deficit targets

Sluggish growth means that total borrowing will still be 3.6 per cent in 2015-16.

Whatever voting system the next election is fought under, the result is likely to be determined by the state of the economy. With this in mind, the latest forecasts don't give George Osborne much cause for optimism. The April review from the National Institute for Economic and Social Research (NIESR) suggests that growth will be significantly lower than expected and that, as a result, Osborne will miss his target to balance the structural deficit by 2015-16 (the OBR expects a surplus of 0.8 per cent). The NIESR predicts that total borrowing will be 3.6 per cent of GDP in 2015-16, well above the OBR forecast of 1.5 per cent.

It notes:

"The weak recovery will feed through to lower tax revenues. That will mean that even if the spending plans are met over the next four years, public sector net borrowing will fall only to 3.6 per cent of GDP in 2015-16 rather than the 1.5 per cent projected by the Office for Budget Responsibility. Likewise, the current budget will then run a deficit of 2.2 per cent of GDP compared with the OBR's surplus of 0.2 per cent. We do not expect the government to meet its target to balance the cyclically-adjusted current budget by 2015-16."

As Osborne's critics have persistently warned, anaemic growth means a slower pace of deficit reduction. At the Budget, the OBR downgraded its growth forecast for 2011 to 1.7 per cent (down from 2.1 per cent in November, 2.3 per cent following the Emergency Budget and 2.6 per cent in June), but the NIESR is predicting growth of just 1.4 per cent for this year. Given that the economy grew by just 0.5 per cent in the first quarter of this year, significantly below the official forecast of 0.8 per cent, the smart money is on the OBR having to downgrade its growth forecast for the fourth time.

The political upshot of all this is that Osborne will have less room to fund a pre-election giveaway in 2015. The Chancellor pushed hard for a five-year term during the coalition negotiations in the belief that this would leave the economy with enough time to recover from his austerity measures. But it looks like his gamble may not pay off.

George Eaton is political editor of the New Statesman.

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The campaign to keep Britain in Europe must be based on hope, not fear

Together we can show the world a generous, outward-facing Britain we can all be proud of.

Today the Liberal Democrats launched our national campaign to keep Britain in Europe. With the polls showing the outcome of this referendum is on a knife-edge, our party is determined to play a decisive role in this once in a generation fight. This will not be an easy campaign. But it is one we will relish as the UK's most outward-looking and internationalist party. Together in Europe the UK has delivered peace, created the world’s largest free trade area and given the British people the opportunity to live, work and travel freely across the continent. Now is the time to build on these achievements, not throw them all away.

Already we are hearing fear-mongering from both sides in this heated debate. On the one hand, Ukip and the feuding Leave campaigns have shamelessly seized on the events in Cologne at New Year to claim that British women will be at risk if the UK stays in Europe. On the other, David Cameron claims that the refugees he derides as a "bunch of migrants" in Calais will all descend on the other side of the Channel the minute Britain leaves the EU. The British public deserve better than this. Rather than constant mud-slinging and politicising of the world's biggest humanitarian crisis since the Second World War, we need a frank and honest debate about what is really at stake. Most importantly this should be a positive campaign, one that is fought on hope and not on fear. As we have a seen in Scotland, a referendum won through scare tactics alone risks winning the battle but losing the war.

The voice of business and civil society, from scientists and the police to environmental charities, have a crucial role to play in explaining how being in the EU benefits the British economy and enhances people's everyday lives. All those who believe in Britain's EU membership must not be afraid to speak out and make the positive case why being in Europe makes us more prosperous, stable and secure. Because at its heart this debate is not just about facts and figures, it is about what kind of country we want to be.

The Leave campaigns cannot agree what they believe in. Some want the UK to be an offshore, deregulated tax haven, others advocate a protectionist, mean-hearted country that shuts it doors to the world. As with so many populist movements, from Putin to Trump, they are defined not by what they are for but what they are against. Their failure to come up with a credible vision for our country's future is not patriotic, it is irresponsible.

This leaves the field open to put forward a united vision of Britain's place in Europe and the world. Liberal Democrats are clear what we believe in: an open, inclusive and tolerant nation that stands tall in the world and doesn't hide from it. We are not uncritical of the EU's institutions. Indeed as Liberals, we fiercely believe that power must be devolved to the lowest possible level, empowering communities and individuals wherever possible to make decisions for themselves. But we recognise that staying in Europe is the best way to find the solutions to the problems that don't stop at borders, rather than leaving them to our children and grandchildren. We believe Britain must put itself at the heart of our continent's future and shape a more effective and more accountable Europe, focused on responding to major global challenges we face.

Together in Europe we can build a strong and prosperous future, from pioneering research into life-saving new medicines to tackling climate change and fighting international crime. Together we can provide hope for the desperate and spread the peace we now take for granted to the rest of the world. And together we can show the world a generous, outward-facing Britain we can all be proud of. So if you agree then join the Liberal Democrat campaign today, to remain in together, and to stand up for the type of Britain you think we should be.