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| Budget 2016: Growth forecasts cut for next five years | Budget 2016: Growth forecasts cut for next five years |
| (35 minutes later) | |
| The UK economy will grow more slowly in the next five years than had been expected in November, the Office for Budget Responsibility (OBR) has said. | |
| The OBR had previously forecast that the economy would grow 2.4% this year, but is now predicting a rate of 2.0%. | |
| Growth in the next two years has been cut by 0.3 percentage points while 2019 and 2020 are down from 2.3% to 2.1%. | Growth in the next two years has been cut by 0.3 percentage points while 2019 and 2020 are down from 2.3% to 2.1%. |
| Chancellor George Osborne said the cuts had been due to a reduction in the growth expected elsewhere in the world. | Chancellor George Osborne said the cuts had been due to a reduction in the growth expected elsewhere in the world. |
| He also announced in his Budget that the OBR had revised UK productivity growth downwards. | He also announced in his Budget that the OBR had revised UK productivity growth downwards. |
| "In the short time since our November forecast, economic developments have disappointed and the outlook for the economy and the public finances looks materially weaker," the OBR said. | |
| The OBR unexpectedly reduced the amount it expects the government to borrow in the current financial year from £73.5bn to £72.2bn. | The OBR unexpectedly reduced the amount it expects the government to borrow in the current financial year from £73.5bn to £72.2bn. |
| In the first 10 months of the financial year, the government has already borrowed £66.5bn, so many commentators predicted that the forecast would have to be raised. | In the first 10 months of the financial year, the government has already borrowed £66.5bn, so many commentators predicted that the forecast would have to be raised. |
| The OBR said it had cut the forecast because it was expecting smaller contributions to the EU in the next two months, as well as lower borrowing by housing associations and lower spending on tax credits. | |
| But it warned that the fall it expected "may not be reflected fully in the initial outturn data due in April". | |
| The forecasts for the following three years have been increased considerably, although the OBR still expects the government to achieve a surplus in 2019-20 and 2020-21. | The forecasts for the following three years have been increased considerably, although the OBR still expects the government to achieve a surplus in 2019-20 and 2020-21. |
| On the total amount of government debt (as opposed to the amount borrowed in a single year) the chancellor admitted that the figure as a proportion of GDP would be higher than it was last year as a result of lower GDP, but that the total amount owed would actually be £9bn lower. | On the total amount of government debt (as opposed to the amount borrowed in a single year) the chancellor admitted that the figure as a proportion of GDP would be higher than it was last year as a result of lower GDP, but that the total amount owed would actually be £9bn lower. |
| So, in the current financial year, total debt is expected to be 83.7% of GDP, up from 83.3% in 2015-15. |