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OBR

Economic growth revised down

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8th Jul 2015
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The first Tory Budget since 1996 saw the Chancellor boasting that the UK is now the fastest growing major economy – despite the growth forecast being moderately downgraded.

The latest economic forecast released by the Office for Budget Responsibility (OBR) published today, has adjusted the growth forecast from 2.5% to 2.4% this year. It is unchanged at 2.3% in 2016, rising from 2.3% to 2.4% in the two subsequent years.

The government’s Budget surplus ambitions were also delayed by one year, where the OBR predicts there will be a £10bn surplus in 2019/20. The OBR had forecast a surplus of £5.2bn in 2018-19, but that has now been revised to a £6.4bn deficit.

The Chancellor said a surplus will mean a “Britain back in the black and in its strongest position for almost half a century”.

On his fiscal plans, Osborne said, “We should cut the deficit at the same pace as we did in the last Parliament. We shouldn’t go faster. We shouldn’t go slower. At this pace the national debt is lower as a share of our national income in every future year than when I presented the Budget in March. And it is achieved without a rollercoaster ride in public spending.”

Osborne said that cuts will not reach the levels of 2011/12 and 2012/13, but his fiscal plan will see a £37bn austerity squeeze over the current parliament. Welfare was the biggest sacrificial lamb with £12bn and raising another £5bn through aggressive pursuit of tax avoiders and evaders.

The Chancellor also announced measures which are aiming to solve Britain’s so called “productivity puzzle” which he referred to as “the great economic challenge”. “[Productivity] is the key to delivering the financial security families see when living standards rise and it will ensure Britain becomes what we want it to be – the most prosperous major economy in the world by the 2030s,” said Osborne. “That is within the grasp of our generation, provided we take the big decisions.”

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