The Office of Budget Responsibility (OBR) has suggested that growth forecasts aren’t as prosperous as previously believed and there is evidence of the reduction of government borrowing slowing.
A report by The Office of Budget Responsibility (OBR) has suggested that growth forecasts aren’t as prosperous as previously believed. Furthermore, there is evidence of the reduction of government borrowing slowing.
In March, the OBR had predicted that the UK economy would grow by 1.7% this year and by a further 2.5% in 2012. Data provided by the independent forecaster implies that these figures look likely to be 0.9% and 0.7% in 2011 and 2012 respectively.
Public borrowing, previously predicted to fall from £121bn in 2011 to £29bn in 2015 has been revised by The Economic and Fiscal Outlook with forecasts now suggesting that borrowing is more likely to fall from £127bn to £53bn over the time period.
The latest predictions may dampen consumer confidence further which may slow efforts to reduce borrowing; demand and investment could remain weak which could inhibit economic growth and put more pressure on public borrowing. Forecasts from the Organisation for Economic Co-operation and Development (OECD) expect the growth of the UK economy to be negative in this quarter and next, which if correct, imply that the UK will once more be in a recession.
This latest report does however predict that growth rates for 2011 and the next couple of years are small but positive, so there is cause for optimism.
The OBR’s predictions suggest that the Eurozone will find a way through its currency crisis but the Chancellor has stated that if doesn’t happen and Europe falls into a recession again, then: “it may be hard to avert one here”. Osborne has tried to calm UK fears by assuring that the government is taking extensive contingency planning for all potential outcomes to the euro crisis.