BUDGET '07: Inflation predicted to fall back

Date: 21 March 2007   |   Author: Rupert Saunders

An ebullient Chancellor of the Exchequer, clearly enjoying his last Budget speech, boasted of the UK having the "longest period of sustained economic growth in our history".

Gordon Brown predicted a GDP growth rate of 2.5% to 3.0% for 2008 and the same rate for 2009. That would make the UK the fastest growing of the G7 group of major economies, alongside the US.

Perhaps more importantly, Brown confidently predicted that inflation would fall back to its target of 2% later this year - suggesting further interest rate rises might not be necessary. He said inflation would remain "on target" for 2008/09.

Investment in the UK, currently running at 6% growth rate, is forecast to rise to 7% by next year.

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