"While our deficit is forecast to go on falling, instead of taking three years to get our debt falling, it's going to take four"
- Chancellor of the Exchequer George Osborne
The British economy is highly expected to contract by the end of this year, despite the improvement in the third quarter, the Office for Budget Responsibility said Wednesday. The economy will shrink by 0.1% in 2012, down from the previous time of the Budget in March, when the forecasts were for a 0.8% growth. At the same time the economy will expand by 1.2 percent next year instead of 2 percent, according to the Chancellor of the Exchequer George Osborne. The government will impose austerity measures till 2017-18, and the country is going to miss its target to start cutting debt.
"While our deficit is forecast to go on falling, instead of taking three years to get our debt falling, it's going to take four," Osborne said. "Some say we should abandon our deficit plan, and try to borrow more. They think by borrowing more, they can borrow less. That would risk higher interest rates, more debt interest payments and a complete loss of Britain's fiscal credibility."
In a separate report, the Chartered Institute of Purchasing and Supply said that the U.K. services growth slowed surprisingly in November, due to the weak domestic demand. A gauge dropped to 50.2, the lowest in 23 months, down from 50.6 in October.
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