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Low inflation to give UK finances '£6bn windfall' | Low inflation to give UK finances '£6bn windfall' |
(35 minutes later) | |
UK government finances will be given a £6bn windfall as lower oil prices drag on inflation. | |
A related boost to consumer spending could also help create a rosier Budget picture for Chancellor George Osborne. | |
The Office for Budget Responsibility is expected to produce a stronger forecast for UK economic growth at Budget time. | The Office for Budget Responsibility is expected to produce a stronger forecast for UK economic growth at Budget time. |
BBC economics editor Robert Peston said a fall in inflation expectations generates an annual windfall for the Treasury of around £6bn. | BBC economics editor Robert Peston said a fall in inflation expectations generates an annual windfall for the Treasury of around £6bn. |
In January UK inflation hit a record low of 0.3%, helped by oil prices. | |
The reduction in the squeeze on public finances is "more or less automatic", he said. | The reduction in the squeeze on public finances is "more or less automatic", he said. |
Low inflation means lower payments by the government on index-linked debt. It also means lower increases on certain benefits, he said. | Low inflation means lower payments by the government on index-linked debt. It also means lower increases on certain benefits, he said. |
Reduced spending on welfare means there could be more cash available for expenditure on schools, hospitals, and the police, he added. | Reduced spending on welfare means there could be more cash available for expenditure on schools, hospitals, and the police, he added. |
Other experts said Mr Osborne could use the spare cash to give more wiggle room in meeting deficit-reduction plans. | Other experts said Mr Osborne could use the spare cash to give more wiggle room in meeting deficit-reduction plans. |
According to the EY ITEM Club, the forecast for borrowing in the current fiscal year ending this month is likely to be revised down to £89bn. | According to the EY ITEM Club, the forecast for borrowing in the current fiscal year ending this month is likely to be revised down to £89bn. |
Experts at HSBC expect a figure of £90.6bn, while they also see the OBR cutting its prediction for 2015/16's deficit from £75.9bn to £73.4bn. | Experts at HSBC expect a figure of £90.6bn, while they also see the OBR cutting its prediction for 2015/16's deficit from £75.9bn to £73.4bn. |
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