Chancellor George Osborne has said the Office for Budget Responsibility (OBR) does “not expect a deficit at all” in the financial year 2018/19.
Speaking this morning at the Houses of Parliament to unveil his Autumn Statement, Mr Osborne proclaimed his economic plan was working but that the “job was not done yet”.
The chancellor said the Coalition’s effort to reduce the defecit had “paid off” and that underlying debt was now 6.8 per cent of GDP - down from the 7.5 per cent forecast in March this year and below the 11 per cent level in 2010.
Mr Osborne said this measure excluded the Royal Mail pension scheme and the asset purchase facility.
“In 2018/19 the OBR does not expect a deficit at all,” Mr Osborne said. “Instead it expects Britain to run a small suplus.”
The chancellor said the OBR had now also predicted the government would “not have to borrow anything at all” in 2018-19.
However, the chancellor ackonwledged the debt to GDP ratio would rise from 75.5 per cent this year to 78.3 per cent next year.
He said it would peak at 80 per cent in 2015-16 and then fall slightly to 79.9 per cent in 2016-17, reaching 75.9 per cent in 2018-19.
Mr Osborne said the OBR had previously forecast that economic growth for 2013 would be 0.6 per cent but that it had now revised this to more than double that rate to 1.4 per cent.
The body said growth next year was also expected to be 2.4 per cent, up from its previous prediction of 1.8 per cent. Mr Osborne said the OBR had also revised up its predictions for the following four years with growth in 2015 being 2.2 per cent, 2.6 per cent in 2016, and 2.7 per cent in both 2017 and 2018.
“Growth is still not as strong as we would like it to be,” the chancellor said, “but it is the largest improvement that any Budget or Autumn Statement has had for 14 years."
The chancellor added that the drop in GDP from 2008-2009 was greater than previously stated.
The OBR said GDP fell 7.2 per cent - greater than the 6.3 per cent figure calculated before.
Elsewhere, Mr Osborne said the private sector would have created 3.1m jobs by 2019 which “more than offsets the 1m reduction in the public sector”.