The Office for Budget Responsbility (OBR) has sharply revised down UK GDP growth forecasts, citing global economic concerns, and said further uncertainty may arise if the country leaves the European Union.
Chancellor George Osborne announced in today’s Budget that figures had been revised down due to both weaker productivity growth estimates and poorer growth in emerging markets such as China.
The combination makes for a “dangerous cocktail of risks,” Mr Osborne said.
Last year’s GDP figure has been revised down from 2.4 per cent to 2.2 per cent, with forecasts for future years also cut.
The OBR now forecasts the ecoonmy will grow by 2 per cent in 2016, down from December’s prediction of 2.4 per cent. It then predicts 2.2 per cent growth in 2017, down from a previous prediction of 2.5 per cent.
Growth will come in at 2.1 per cent for the subsequent three years, according to the latestforecasts - a drop of 20 basis points in 2018 and 10 basis points on previous forecasts for 2019 and 2010.
These figures are based on the UK remaining part of the European Union, according to the forecaster. A Brexit “could usher in an extended period of uncertainty”, it warned.
The OBR also predicted inflation rates of 0.7 per cent for 2016 - down from the 1 per cent predicted in December - and 1.6 per cent for 2017.
In December Mr Osborne announced the government would eradicate the structural deficit by 2020. While this remains intact, spending as a percentage of GDP has been revised upwards for each of the years before 2020.
Mr Osborne said borrowing as a percentage of GDP would also be revised upwards. This figure will be 74.7 per cent by 2019/20 instead of the predicted 71.3 per cent from December.