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Budget 2012: George Osborne raises UK growth forecast | Budget 2012: George Osborne raises UK growth forecast |
(about 1 hour 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 the tax year 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 expected the UK to avoid a technical recession - defined as two consecutive quarters of contraction - and forecast positive growth for the first three months 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." |
'Long haul' | |
Ian Stewart, chief economist at Deloitte, said that while the Budget had a "spring-like" feel to it, people should not get too carried away. | |
The majority of public spending cuts, which are vital to the government's strategy for reducing the deficit, lie ahead, he said. | |
"The margin for error in reducing the UK's still huge deficit over the next five years is small and dependent on the unpredictable path of growth. There's still a long haul ahead for the UK economy." | |
Inflation, which has been falling steadily over the past 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. | 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%. | The unemployment rate for 2016 was revised up slightly from 6.2% to 6.3%. |
But the OBR did forecast one million more jobs in the economy over the next five years. | |
And it revised 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. | It is now expected to peak at 1.67 million this year, rather than 1.8 million. |