Budget 2017: Growth now forecast to reach 2%

Cornelia Mascio
Marzo 9, 2017

In one of the biggest upgrades to the watchdog's annual growth forecasts, Robert Chote, the chairman of the Office for Budget Responsibility (OBR) said the recent strength of the economy meant the United Kingdom would expand by 2pc this year, up from a previous forecast of 1.4pc growth. The OBR also downgraded its budget deficit forecasts by £16.4bn to reach £51.7bn this year, below the £55.5bn forecast in March 2016, before the Brexit vote.

Government borrowing is expected to fall from 3.8% of GDP last year to 2.6% this year.

However, the OBR's Economic and fiscal outlook noted that the improved picture was largely down to one-off factors and timing effects that "flatter" this year's figures at the expense of next year's.

Earnings will rise by 0.2 per cent above inflation this year, before accelerating to rise by 1.6 per cent more than prices by 2021, according to the Office for Budget Responsibility (OBR).

The forecast for growth was also boosted by multiple one-off accounting changes, such as the timing of contributions to the European Union budget.

"Then £58.3bn in 2017/18 £40.8bn in 18/19 £21.4bn £20.6bn and finally £16.8bn in 21/22 all lower than forecast at Autumn statement".

"Britain has a debt of nearly £1.7 trillion - almost £62,000 for every household in the country".

"We will not saddle our children with ever-increasing debts". That is a big change to the forecasts over such a short period for the financial year about to end.

Daniel Mahoney, head of economic research at the free market Centre for Policy Studies said: "It is welcome that, despite the UK's borrowing forecasts improving, the Budget 2017 was not full of giveaways".

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