Is Osborne borrowing more or less?

The Chancellor is set to borrow more than Gordon Brown planned.

Is George Osborne borrowing more or less? You won't find a simple answer in today's papers. The Guardian reports that "Britain will borrow £21.5bn less than previously forecast" but the FT warns that "the black hole in UK public finances has increased by almost £30bn." Elsewhere, Reuters reports that the Office for Budget Responsibility's forecasts are expected to show a "borrowing overshoot of at least 86 billion pounds over four years." Who's right? The answer is that they all are.

In his autumn statement, at 12:30pm, Osborne will announce that Britain's record low bond yields have saved the taxpayer £21.5bn, the so-called "safe haven dividend". Money that would have been spent on financing the national debt can now be spent on enterprise schemes, free childcare, business tax breaks and so on.

But unfortunately for the Chancellor, that's not the end of story. Owing to lower growth and higher unemployment (which leads to a larger welfare bill), public sector net borrowing is expected to be around £86bn higher (the Reuters figure) than forecast at the time of the Budget in March. Even before today, Osborne was forecast to borrow £46bn more than expected. When the OBR publishes its latest forecasts today, that figure could rise to an enormous £132bn (£46bn + £86bn), taking Osborne's total borrowing over that planned by Alistair Darling. The Brown government was forecast to borrow £127bn in 2011-12 and £106bn in 2012-13. Osborne is expected to borrow £129bn ths year (up from £122bn) and £117bn next year (up from £101bn). Labour's smart attack line is that while the Chancellor is borrowing to meet the cost of high unemployment, it would have borrowed to fund growth.

Then there's the structural deficit, the "black hole" the FT refers to. The structural deficit - the part of the deficit that remains even after growth returns - is now forecast to be £30bn bigger. This is because the output gap - the difference between actual and potential growth - is smaller than previously thought. In other words, the economy is capable of less growth than initially forecast. This can't be blamed on Osborne's policies and, worryingly for messrs Balls and Miliband, has implications for Labour's own deficit reduction plan. It also means that the Chancellor is almost certain to miss his self-imposed target of eliminating the structural deficit before the next election. However, he is still likely to meet his formal fiscal mandate - to eliminate the structural deficit over a rolling five-year period. For example, from today, he has until 2016-17 to eliminate the deficit, from next year, he'll have until 2017-18. But meeting this target means extending austerity into the next parliament. A structural deficit can only be eliminated by spending cuts and tax rises, so Osborne will go into the next election warning of further pain to come.

The Chancellor's pledge to eliminate the structural deficit in one parliament was based on a political timetable, not an economic one. By 2015, Osborne envisaged that the Tories would be able to boast that they had cleaned up "the mess" left by Labour - a powerful political narrative - and offer cuts in personal taxation. But, as the grim figures above show, this is now a distant dream.

George Eaton is political editor of the New Statesman.

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Have voters turned against globalisation? It depends how you describe it

Brits are more positive about diversity than Sweden. 

New research shows that citizens across Europe are pessimistic about the future, distrustful of government and other political institutions, ambivalent at best about multiculturalism, and increasingly sceptical about the role of the European Union.

We wanted to understand the extent to which Europe’s citizens favour a "closed" rather than an "open" outlook and perspective on politics, economics and society. Making globalisation work for ordinary people in the developed world is one of the defining challenges of the 21st century. Globalisation’s popularity and political viability is both a pre-condition and a consequence of making it work, but mainstream politicians seem to be failing to persuade us to embrace it, to the detriment of democratic institutions and norms, as well as their own careers.

The decision of the British people to leave the European Union has been perceived as yet another step back from globalisation and a rejection of an "open" outlook that favours international co-operation in favour of a more closed, inward-looking national debate.

There’s certainly a strong element of truth in this explanation. The referendum campaign was deeply divisive, with the Leave campaign playing heavily on concerns over immigration, refugees and EU enlargement. As a consequence, the "liberal" Leavers – those who wanted to leave but favoured a continuing a close economic relationship with the EU along with free movement of labour – appear to have been side-lined within the Conservative party.

Our results are by no means uplifting, but it’s not all doom and gloom. While there’s no doubt that opposition to certain features and consequences of globalisation played an important role in driving the Leave vote, Brits as a whole are just as open, outward-looking and liberal-minded, if not more so, than many of our European neighbours.

First, we asked respondents in all six countries the following:

“Over recent decades the world has become more interconnected. There is greater free trade between countries and easier communication across the globe. Money, people, cultures, jobs and industries all move more easily between countries

“Generally speaking, do you think this has had a positive or negative effect?”

Respondents were asked to consider the effects at four levels: Europe as a whole, their country, their local area, and their own life.

Overall, British voters are overwhelmingly positive about globalisation when described in this way - 58 per cent think it has benefited Europe and 59 per cent think it has benefited Britain. More than half (52 per cent) think it has benefited their local area, and 55 per cent think it has benefited their own life.

One might respond that this question skates over questions of immigration and multiculturalism somewhat, which are the most controversial features of globalisation in the UK. Therefore, we asked whether respondents thought that society becoming more ethnically and religiously diverse had changed it for the better or for the worse.

Overall, 41 per cent said that ethnic and religious diversity had changed British society for the better, while 32 per cent said it had changed for the worse. That’s a net response of +9, compared to -25 in France, -13 in Germany, and -17 in Poland. Brits are even more positive about ethnic and religious diversity than Sweden (+7) – only Spanish respondents were more positive (+27).

There’s a long way to go before ordinary people across the developed world embrace globalisation and international cooperation. Despite the apparent setback of Brexit, the UK is well-placed politically to take full advantage of the opportunities our increasingly inter-connected world will present us with. It would be a mistake to assume, in the wake of the referendum, that the British public want to turn inwards, to close themselves off from the rest of the world. We’re an open, tolerant and outward-looking society, and we should make the most of it.

Charlie Cadywould is a Researcher in the Citizenship Programme at the cross-party think tank Demos. His writing has been published in peer-reviewed journals as well as the national media.