Britain's Finance minister George Osborne may have to resort to big tax hikes or a new round of deep spending cuts to meet his target of turning Britain's budget deficit into a surplus by the end of the decade. As Joel Flynn reports, that's the warning from the head of a leading economic think tank.
George Osborne's budget was more steady as she goes than full steam ahead. With a British referendum on the EU looming the Finance Minister clearly didn't want to rock the boat. But just a day later, doubts are being cast over his plans. The Institute of Fiscal Studies says achieving a budget surplus by 2020 - as Osborne has promised - will need either big tax hikes or more austerity. SOUNDBITE: Commerzbank Global Financial Economist, Peter Dixon, saying (English): "The only way you're going to get a significant improvement, relative to what the Chancellor expects, is to cut spending again, and of course the more you cut spending, the more you impact upon economic activity." Osborne says he can turn what will be a 40 billion pound deficit in 2018 into a 10 billion pound surplus just two years later. That's despite a weaker growth projections of 2 percent this year and 2.2 percent in 2017. SOUNDBITE: Commerzbank Global Financial Economist, Peter Dixon, saying (English): "Certainly if I were sitting in the Treasury looking at my revenue projections I might be more concerned, but I think for the economy as a whole it's perhaps a more robust outlook than many other parts of the industrialised world." Osborne has already broken two of the three fiscal rules he set himself six years ago. Without a surplus by 2020, he'll be breaking the third.