United Kingdom growth forecast for 2017 revised up

Cornelia Mascio
Marzo 9, 2017

However, growth will slow to 1.6% in 2018, compared with a previous forecast of 1.7%, before picking up to 1.7% in 2019 and 1.9% and 2% respectively in the two years thereafter. 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.

Noting the "eye-watering" public debt, Woodford adds: "There are challenges ahead economically - not least, the public debt burden which, despite recent improvements, remains "eye-watering" - but the United Kingdom economy is relatively well-placed to deal with them and we would expect the debt burden to start to diminish more quickly than the Chancellor has forecast, over the next five years".

Mr Hammond told MPs: "Overall public sector net borrowing as a percentage of GDP has been predicted to fall from 3.8 per cent last year to 2.6 per cent this year".

"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". The figure would then rise to 2.9% in 2018-19, but fall to 0.7% by 2021-22 - the lowest rate in two decades, according to the chancellor.

Neil Woodford says Philip Hammond's first and final Spring Budget was more interesting for its "context than its content".

He said some had argued that lower government borrowing could permit higher spending, but he disagreed.

But he argued that, with debt of nearly £1.7 trillion - equivalent to £62,000 for every household in the country - there would be no unfunded public spending.

"The OBR attributes this change to a number of one-off factors that they do not lead to expect to lead to a structural improvement over the forecast period".

Real wages are set to grow steadily for the next five years, the government's Budget watchdog said, as it upgraded growth predictions for this year.

Samuel Tombs at Pantheon Macroeconomics, said the new growth forecasts did not give the chancellor much help.

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

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