By Jonathan Davies
'Don't expect tax breaks from the Autumn Statement', the EY Item Club is warning.
The financial forecasting group says the Chancellor George Osborne has "very limited room for manoeuvre" in terms of providing tax breaks.
It said that growth forecast for 2014 is likely to be raised by 0.25-0.5%, but added that it probably wouldn't be matched by tax receipts.
Combined revenues from income tax, national insurance contributions and capital gains tax are likely to be £9bn below the forecast put forward by the Office for Budget Responsibility (OBR), according to EY.
In addition, income tax revenues aren't growing despite record levels of employment due to the number of people going into part-time or low paid work. Revenue from stamp duty is also falling as the UK's housing market continues to slow down.
Martin Beck, senior economic advisor to the EY Item Club, says: "In recent Autumn Statements, the chancellor has been able to trumpet a series of upward revisions to the OBR's growth forecast as evidence that his economic plan is working. This time, that's where the good news is likely to end.
"The improvement in the public finances is in danger of not just stalling but going into reverse. With just five months to go it appears virtually impossible for the government to achieve the OBR's current forecast for borrowing in 2014-15."
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