George Osborne rattled through the OBR’s borrowing forecasts in his autumn statement – and with good reason. They show that, as a result of lower growth and higher unemployment, he will be forced to borrow £158bn more than forecast a year ago. Even more strikingly, Osborne is now set to borrow £19bn more than Labour was projected to (see Table 4.5 on p. 38 of the OBR’s June 2010 release). With glorious irony, the national debt will now be higher under the coalition (78 per cent of GDP in 2014-15) than it would have been under Labour (74 per cent of GDP).
Labour’s smart line of attack is that while Osborne is borrowing to meet the cost of unemployment, they would have borrowed to fund growth.
It’s true that external factors may well have forced a Labour chancellor to borrow more than forecast but here’s the question Osborne and his allies will have to answer: why aren’t the bond markets panicking? They claimed that borrowing a billion more than planned would take Britain to the “brink of bankruptcy”. But the fact that Osborne is set to borrow a huge £158bn more than forecast in November 2010 shows this up as the myth it always was.