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14/06/2010
UK Growth Forecast Cut
The new fiscal watchdog has downgraded the UK's economic growth predictions.
The Office for Budget Responsibility (OBR) has forecast that the economy will expand 2.6% in 2011, down from the 3% to 3.5% estimated in Labour's March Budget.
According to the watchdog deficit and debt will not be as bad as forecast, borrowing is predicted at £155bn in the current financial year, that's £8m below the £163bn forecast.
Former Labour Chancellor Alistair Darling said the government doesn't have the excuse to raise VAT because the OBR's figures show that borrowing will be less than forecast.
The British Chambers of Commerce's chief economist David Kern said: "The new forecasts are more realistic than those in the March budget, but the growth expectations are still overly optimistic
"For the world economy, the expectation that growth will return fairly rapidly to the levels seen before the recession is too rosy - especially given the current eurozone problems and worrying signs that the US recovery may be stalling."
Chancellor George Osborne is due to unveil an emergency Budget next Tuesday. He has pledged to cut public spending to reduce the deficit.
(GK)
The Office for Budget Responsibility (OBR) has forecast that the economy will expand 2.6% in 2011, down from the 3% to 3.5% estimated in Labour's March Budget.
According to the watchdog deficit and debt will not be as bad as forecast, borrowing is predicted at £155bn in the current financial year, that's £8m below the £163bn forecast.
Former Labour Chancellor Alistair Darling said the government doesn't have the excuse to raise VAT because the OBR's figures show that borrowing will be less than forecast.
The British Chambers of Commerce's chief economist David Kern said: "The new forecasts are more realistic than those in the March budget, but the growth expectations are still overly optimistic
"For the world economy, the expectation that growth will return fairly rapidly to the levels seen before the recession is too rosy - especially given the current eurozone problems and worrying signs that the US recovery may be stalling."
Chancellor George Osborne is due to unveil an emergency Budget next Tuesday. He has pledged to cut public spending to reduce the deficit.
(GK)
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