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Fiscal targets could be breached – Osborne

The Chancellor is expected to admit that fiscal targets will be breached, after lower than expected growth this year.

The timetable for reducing debt as a proportion of national income may have to be extended even further, George Osborne will say, to 2018.

He is expected to use this week’s Autumn Statement announce an increase in capital infrastructure spending, including on roads and housing, alongside funding for further education. Additionally, reports suggests the Autumn Statement could include a reduction, by up to a third, the tax-exempt amount that people can pay into pensions, to raise nearly £2bn.

Working age benefits will be squeezed, allowing them to rise below inflation from next April. And Osborne is also likely to shelve plans to withdraw housing benefit from the under-25s, following Liberal Democrat opposition. The plans will be put into the Conservative manifesto for the next election.

Osborne told the BBC's Andrew Marr programme: “It's clearly taking longer to deal with Britain’s debts. It’s clearly taking longer to recover from the financial crisis than anyone would have hoped.

“But we’ve made real progress – the deficit is down by a quarter, there are a million more jobs in the private sector – and to turn back now, to go back to the borrowing and the debt and the spending, would be a complete disaster for our country.

“In the last two years we've had the eurozone crisis, we've had an oil price shock, we’ve got problems in some of the emerging markets. You know we don't operate in a vacuum.”

Osborne will be making his Autumn Statement on Wednesday.

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