Public sector job cuts ‘to be deeper’ – report
THE private sector will have to provide an extra 100,000 jobs as public sector cuts bite deeper than expected, according to a new report.
Analysis by the Ernst & Young ITEM Club suggests the Office of Budget Responsibility will tomorrow forecast 500,000 public sector job losses over the next five years, up from the 400,000 it predicted in March.
The OBR is also expected to slash its GDP forecasts for 2011 and 2012 from 1.7% and 2.5% to 0.9% and below 1%.
Chancellor George Osborne is due to give his Autumn Statement hours after the latest OBR forecasts tomorrow.
Andrew Goodwin, senior economic adviser to the Ernst & Young ITEM Club, said: “The UK’s unemployment rate is already at 8.3%, but there’s worse still to come. As the public sector spending cuts start to feed through towards the end of this Parliament, the axe is inevitably going to fall on the labour market. The OBR have been fairly conservative in their estimates of job losses, but the latest data on public sector employment suggests that the casualties could easily be as high as half a million.”
The Chancellor is under pressure to find room in his spending plans for action that could help stimulate the economy and the ITEM Club suggests lower gilt yields should give him room to use money earmarked for interest payments for other spending.
