Warning on rising public borrowing

My Account
Logout

Create an Evening Standard Account

Use your social network

Save time by using your existing account to sign in to Evening Standard

We'll never share your information or post anything to your account without your permission

Welcome! Sign in here

Use your social network

Save time by using your existing account to sign in to Evening Standard

We'll never share your information or post anything to your account without your permission

Forgot your password ?

Registration

* indicates fields that are mandatory

Email *

Password *

Confirm Password *

First name *

Surname *

Postcode *

Country *

Mobile phone number

Username *

Gender *

Year of birth *

When you sign up...

You will have access to all our online competitions, discounted offers and can post comments on our site.

You will also receive The Weekender newsletter sent every Thursday - it’s full of fantastic offers and ideas for the weekend. You can update your email preferences in your account page when you log in.

Other newsletters and emails

Homes & Property Newsletter - Yes I want to receive the weekly email with all the latest news on property in the capital

Occasionally we would also like to send you relevant emails detailing specific offers either from ourselves or carefully selected partners. If you would prefer not to receive these then please tick the appropriate boxes below. We will never pass on your details.

I do not want to receive additional offers and information from the Evening Standard

I do not want to receive additional offers and information sent by Evening Standard on behalf of carefully selected partners

Terms and Conditions

* I have read, understood and agree to be bound by the terms and conditions of Evening Standard

Registration

Mail Sent for Registration Confirmation.

A confirmation email has been sent. Please activate your account by clicking on the activation link sent in your mail box.

Borrowing is likely to hit £165.7 billion this year - 12% of output - and remain at £121.6 billion by 2013/14, said the National Institute of Economic and Social Research (NIESR).

It arrived at the huge figure despite assuming a "more aggressive curtailing" of public sector spending than in its April forecasts.

"The introduction of a more credible plan to return the public finances to a path of fiscal sustainability remains a necessity," NIESR said.

The think-tank forecasts huge spending cuts as well as higher taxes over the next four years as the country labours under the burden of servicing its mammoth debts.

"With the rapid accumulation of debt under way, debt interest payments are also expected to increase as a share of GDP over the next few years. This suggests that spending on goods and services by the state will have to be squeezed significantly," it adds.

The think-tank's warning echoes recent comments from the Bank of England Governor, Mervyn King, over the need for firmer action on the public finances.

After a 4.3% decline this year, NIESR forecasts growth of 1% next year and 1.8% in 2011 - well below "optimistic" Treasury forecasts.

On Friday official figures are likely to show a much shallower economic decline for the second quarter of 2009, following the UK's 2.4% slump in the first three months of the year - the biggest in more than 50 years.

NIESR said this was "probably the worst quarterly economic performance in the UK since the 1926 General Strike".