UK finances 'vulnerable' after Budget

LABOUR'S “spend now, tax later” approach to fiscal policy may well drive higher growth than previously expected, an industry group has said, but will leave UK public finances in a “vulnerable” position.

- By JOHN SMITH

The Confederation of British Industry (CBI) upgraded its growth forecast for next year from 1% to 1.3%. An extra £11billion in state spending plans revealed in the Budget account for most of the difference in forecasts published between today and June. It also pencilled in “moderate” GDP growth of 1.5% in 2027.

CBI economists said its upgrade came with a caveat after it was revealed the government would be increasing borrowing in the next three years to be able to spend more on welfare. The bulk of extra government revenue in the Budget made through tax hikes will stream in from 2028 in a set of measures the CBI referred to as “spend now, tax later”.