Britain's new fiscal watchdog to cut growth forecast: report
Britain's new fiscal watchdog was Monday expected to cut growth forecasts made by the previous Labour government, in its first report on the country's economic prospects, reports said.
The independent Office for Budget Responsibility (OBR), which was set up by the new coalition government, will conclude that the economic forecast for 2011 by former finance minister Alistair Darling was too optimistic.
The report will pave the way for tax rises and spending cuts for what is expected to be a tough emergency budget on June 22, the Financial Times and the BBC said.
The Conservative-Liberal Democrat power-sharing administration, which has been in power for around a month, has made tackling Britain's record 156-billion-pound (230-billion-dollar, 185-billion-euro) deficit a priority.
The new watchdog, headed by former finance ministry official Alan Budd, is not expected to greatly increase its forecast for the overall size of the deficit, said the Financial Times.
Conservative Prime Minister David Cameron said last week that the state of Britain's finances was "even worse than we thought" and warned of "painful" and unavoidable cuts.
"How we deal with these things will affect our economy, our society -- indeed our whole way of life," he said in a keynote speech.
"The decisions we make will affect every single person in our country. And the effects of those decisions will stay with us for years, perhaps decades, to come."
Nick Clegg, the Liberal Democrat deputy prime minister, will say later Monday that the previous Labour administration had left the new government with no option but to make deep cuts.
"This is not a task we relish, nor was it our choice," he will say, according to the FT.
The watchdog's report comes ahead of a major speech Wednesday by Chancellor George Osborne.
The new finance minister is expected to say that the Bank of England will be given the main responsibility for preventing or responding to future financial crises.
© 2010 AFP