Public sector job cuts predictions 'too conservative'

image captionHundreds of thousands of public sector workers are expected to lose their jobs in the next few years

Official estimates for public sector job losses are too conservative to meet government spending cuts, an independent forecasting group has said.

The Ernst and Young ITEM Club expects the Office for Budget Responsibility to raise public sector job loss estimates over the next five years by 100,000.

In March, the OBR predicted 400,000 job losses, but the forecasters believe this will be revised to about 500,000.

The OBR produces forecasts used by the Treasury to form fiscal policy.

ITEM stands for 'Independent Treasury Economic Model' and the group is the only non-governmental forecasting group to use the same economic model for its UK forecasts as HM Treasury and the OBR.

The forecaster said this means it is "in an unrivalled position to test whether government claims are consistent and whether its forecasts are credible".

The predictions come ahead of Chancellor George Osborne's autumn statement, in which he will outline the state of the UK's economy, on Tuesday.

Andrew Goodwin, senior economic adviser to the Ernst and Young ITEM Club, said: "With the OBR set to deliver one of their gloomiest forecasts to date, and the eurozone crisis adding to the economic instability, we're unlikely to see any big giveaways on Tuesday."

He added that "the pressure will be on for the chancellor to use any wiggle room available to help boost the UK's economic prospects".

Earlier this month, business organisation the CBI cut its forecast for UK economic growth, but called for government austerity to continue.

Growth was expected to be 0.9% this year and 1.2% in 2012, below its previous predictions of 1.3% and 2.2%.

And the unemployment rate was forecast to rise from 8.1% now to 8.5% next year.

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