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| Budget 2012: George Osborne raises UK growth forecast | Budget 2012: George Osborne raises UK growth forecast |
| (40 minutes later) | |
| The UK economy will grow more quickly this year than previously forecast, Chancellor George Osborne has said. | The UK economy will grow more quickly this year than previously forecast, Chancellor George Osborne has said. |
| The independent Office for Budget Responsibility (OBR) forecasts growth of 0.8% in 2012, compared with its autumn estimate of 0.7%. | The independent Office for Budget Responsibility (OBR) forecasts growth of 0.8% in 2012, compared with its autumn estimate of 0.7%. |
| The OBR also now estimates that the government will borrow £1bn less than previously forecast this year. | The OBR also now estimates that the government will borrow £1bn less than previously forecast this year. |
| Mr Osborne said his Budget signalled the government's "unwavering commitment to deal with Britain's record debt". | Mr Osborne said his Budget signalled the government's "unwavering commitment to deal with Britain's record debt". |
| Total borrowing up to 2016-17 will be £11bn less than forecast last autumn, Mr Osborne said. | Total borrowing up to 2016-17 will be £11bn less than forecast last autumn, Mr Osborne said. |
| The OBR confirmed that the government was on course to eliminate the structural current deficit by 2016-17. | The OBR confirmed that the government was on course to eliminate the structural current deficit by 2016-17. |
| Eurozone risk | Eurozone risk |
| The UK economy shrank by 0.2% in the fourth quarter of last year, but Mr Osborne said the OBR expects the UK to avoid a technical recession - defined as two consecutive quarters of contraction - and forecasts positive growth in the first quarter of this year. | The UK economy shrank by 0.2% in the fourth quarter of last year, but Mr Osborne said the OBR expects the UK to avoid a technical recession - defined as two consecutive quarters of contraction - and forecasts positive growth in the first quarter of this year. |
| However, while slightly better economic growth is expected this year, the growth forecast for 2013 was revised down. | However, while slightly better economic growth is expected this year, the growth forecast for 2013 was revised down. |
| The OBR now projects 2% growth in 2013, down from the 2.1% it estimated in November. | The OBR now projects 2% growth in 2013, down from the 2.1% it estimated in November. |
| In 2014 the economy is expected to grow by 2.7%, while growth of 3% is projected in both 2015 and 2016, in line with the previous forecast. | In 2014 the economy is expected to grow by 2.7%, while growth of 3% is projected in both 2015 and 2016, in line with the previous forecast. |
| Mr Osborne said that the crisis in the eurozone remained a major risk to the OBR's forecast, while another risk came from a "further spike in oil prices". | Mr Osborne said that the crisis in the eurozone remained a major risk to the OBR's forecast, while another risk came from a "further spike in oil prices". |
| Earlier, figures from the Office for National Statistics showed that the government borrowed much more than expected in February. | Earlier, figures from the Office for National Statistics showed that the government borrowed much more than expected in February. |
| But the OBR still lowered its borrowing forecast for 2011-12 to £126bn from £127bn in the autumn. | But the OBR still lowered its borrowing forecast for 2011-12 to £126bn from £127bn in the autumn. |
| Its estimate for 2012-13 remains at £120bn, excluding the transfer of assets from the Royal Mail pension fund to the government. | Its estimate for 2012-13 remains at £120bn, excluding the transfer of assets from the Royal Mail pension fund to the government. |
| Its forecasts further ahead were also lowered. It now expects borrowing of £98bn in 2013-14 (compared with £100bn forecast in November), £75bn in 2014-15 (£79bn), £52bn in 2015-16 (£53bn) and £21bn in 2016-17 (£24bn). | Its forecasts further ahead were also lowered. It now expects borrowing of £98bn in 2013-14 (compared with £100bn forecast in November), £75bn in 2014-15 (£79bn), £52bn in 2015-16 (£53bn) and £21bn in 2016-17 (£24bn). |
| Howard Archer, chief UK economist at IHS Global Insight, said that the new forecasts from the OBR provided a "rare recent luxury" for Mr Osborne. | Howard Archer, chief UK economist at IHS Global Insight, said that the new forecasts from the OBR provided a "rare recent luxury" for Mr Osborne. |
| "This is of welcome relief to the chancellor and spares him having to tighten overall fiscal policy further," Mr Archer said. | "This is of welcome relief to the chancellor and spares him having to tighten overall fiscal policy further," Mr Archer said. |
| But he added: "Having said that, projected GDP (gross domestic product) growth of 0.8% in 2012 is still worryingly weak and hardly a matter for celebration. And the very disappointing public finance data for February itself highlights that there are serious risks to the government meeting its fiscal targets." | But he added: "Having said that, projected GDP (gross domestic product) growth of 0.8% in 2012 is still worryingly weak and hardly a matter for celebration. And the very disappointing public finance data for February itself highlights that there are serious risks to the government meeting its fiscal targets." |
| Inflation and unemployment | |
| Inflation, which has been falling steadily over the last few months and currently stands at 3.4% on the Consumer Prices Index (CPI) measure, is now expected to fall to 2.8% this year and 1.9% in 2013. | Inflation, which has been falling steadily over the last few months and currently stands at 3.4% on the Consumer Prices Index (CPI) measure, is now expected to fall to 2.8% this year and 1.9% in 2013. |
| In November, the forecasts were for 2.7% and 2.1% respectively. | In November, the forecasts were for 2.7% and 2.1% respectively. |
| Unemployment expectations were unchanged, with a jobless rate of 8.7% forecast for this year, 8.6% in 2013, 8.0% in 2014 and 7.2% in 2015. | |
| The unemployment rate for 2016 was revised up slightly from 6.2% to 6.3%. | |
| But the OBR did revise its estimate for the claimant count - the number of people claiming Jobseeker's Allowance - down by about 100,000 for each of the next four years. | |
| It is now expected to peak at 1.67 million this year, rather than 1.8 million. |