"The net effect of borrowing 25 billion pounds more than forecast in the budget would imply a deficit of 14.9 billion pounds [$18.4 billion] rather than the target of a 10.4-billion-pound surplus set by former chancellor George Osborne," the report, entitled "Winter is Coming: The outlook for the public finances in the 2016 Autumn Statement," said.
According to report, British tax revenues would be $38.3 billion lower by the 2019-20 fiscal year than expected, which means that instead of a surplus of $12.8 billion the United Kingdom might face an $18.5-billion deficit.
"By 2019-20, we forecast a deficit of £14.9 billion, as opposed to the £10.4billion surplus forecast in March. This £25.3 billion worsening is caused by a reduction in receipts, which are around £31 billion lower. This is slightly offset by spending that is around £6 billion lower driven by an assumed £8 billion cut to public spending from not longer having to make a net contribution to the EU budget. This turns a 0.5% of national income surplus into a 0.7% deficit-a worsening of the net borrowing position by 1.2% of national income," the UK-based economic research institute explained.
The report comes ahead of the first budget statement by UK Chancellor of the Exchequer Philip Hammond that would be announced on November 23.
On October 26, the Resolution Foundation thinktank warned Hammond of an 84-billion-pound ($102bln) black hole in public finances over the next five years, increasing debt and inflation rates, slower wage growth, falling value of the pound and rising unemployment.
The following day, the Treasury's internal briefing document published by mistake on the government’s website revealed that the UK government would be unable to implement its deficit reduction plan due to 2.3 billion pounds ($2.8bln) deficit and a 700-million pound ($855mln) EU bill that London has to pay after the Brexit referendum.
