Chancellor George Osbourne has announced that the UK’s deficit will start to fall in 2016/2017, one year later than targeted.
The Office of Budget Responsibility (OBR) estimated the deficit to be 74.7% next year, rising to 76.8% in 2013/2014, and to 79.9% in 2015/2016.
The deficit will then fall to 79.2% in 2017, and is predicted to fall even further to 77.3% in 2017/2018.
Osbourne said that due to difficult economic conditions, it will take four years, not three, before the UK’s deficit starts to fall.
He said he would not borrow more, as it would risk higher interest rates and diminish the UK’s fiscal credibility.
The UK economic growth will be lower than expected at -0.1% for 2012 as a result of the tough international economic conditions, it was also announced.
Osborne (pictured) said: 'There are no quick fixes. We are making progress, it is a hard road but we are getting there. If we turn back now it would be a disaster.'
He blamed international headwinds such as the US fiscal cliff, slowing growth in China and problems in Europe, which hit exports.
Osborne said that according to the OBR the lower than expected growth figure is more than accounted for by over optimism in Europe, which was expected to recover but has retracted and that has hit exports. That has spilled over to tougher credit conditions and interbank funding, and this will continue in years to come.
The OBR forecast that Britain’s deficit will continue to fall.
Last year, Britain’s deficit was at 7.9%. This year is it is expected to fall to 6.9%.
It is then expected to go down to 6.1% in 2014, 5.2% in 2015, 4.2% in 2016 and 2.6% in 2017 and reach 1.6% in 2017/2018.
Britain’s borrowing is also predicted to decrease. This year, borrowing hit £108 billion and is set to go down to £99 million in 2013, £88 million in 2014, £73 billion in 2015, £49 billion in 2016 and £31 billion in 2017.