The Chancellor’s autumn statement represents a “significant alteration in the government’s economic and political strategy,” says Royal London Asset Management (RLAM) economist Ian Kernohan.
Chancellor George Osborne had previously indicated that the UK’s economic plan meant the structural deficit would be closed by 2015.
Kernohan says the current strategy looks “holed below the waterline” and the UK is already on ’Plan B’.
The economist notes that the Office for Budget Responsibility believes the government will meet its fiscal rules two years later than indicated earlier this year and could yet call for further austerity.
“Such an event would be political dynamite and undermine the sense of political stability which the UK has enjoyed in the debt markets,” warns Kernohan.
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