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Budget 2017: UK productivity and growth forecasts slashed, admits Chancellor Budget 2017: UK productivity and growth forecasts slashed, admits Chancellor
(35 minutes later)
The UK’s fiscal watchdog has slashed its forecast for economic growth for this year and next, and said that productivity will also be lower than expected, against a backdrop of lacklustre wage growth and sluggish investment. The UK’s fiscal watchdog has dramatically slashed its forecast for economic growth for this year and next, and said that productivity will also be lower than expected, against a backdrop of lacklustre wage growth and sluggish investment.
The Office for Budget Responsibility’s predictions, presented by Chancellor Philip Hammond as part of his Budget statement, see the UK economy growing by 1.5 per cent this year and 1.4 per cent next. The Office for Budget Responsibility’s predictions, presented by Chancellor Philip Hammond as part of his Budget statement, see the UK economy growing by 1.5 per cent this year and 1.4 per cent next, before slipping to 1.3 per cent in 2019 and 2020 and then picking up gradually to 1.5 per cent and 1.6 per cent in 2021 and 2022 respectively.
In March, the OBR said that it expected the economy to expand by 2 per cent this year and 1.6 per cent next.  In March, the OBR said that it expected the economy to expand by 2 per cent this year and 1.6 per cent next, before climbing to 1.7 per cent, 1.9 per cent and 2 per cent in the three years to 2021.
More follows… The UK economy grew by 0.4 per cent in the third quarter of 2017, according to the ONS. That was stronger than the 0.3 per cent growth in the second quarter but below the 0.6 per cent growth in the eurozone.
Mr Hammond said on Wednesday that the OBR had also trimmed its outlook for potential productivity growth.
In the March Budget, the OBR forecast potential output per hour would grow by 2 per cent this year, 1.6 per cent next year and 1.7 per cent in 2019, before rising to 1.9 per cent and 2 per cent in 2020 and 2021 respectively.
Slower economic growth across the UK is likely to mean lower tax revenues for the Treasury.