Interest rate pressure eases
06 December 2006
Author: Rupert Saunders
The UK economy is strong and growing faster than predicted, said Chancellor Gordon Brown in his Pre-Budget Report. He revised his 2006 GDP growth prediction up to 2.75% from the 2% to 2.5% anticipated in this year's Budget.
The acceptance of a faster economic growth rate will reduce the pressure on the Bank of England Monetary Policy Committee to raise interest rates.
However, UK inflation in October remained at 2.4% - well ahead of the 2.0% target that the Bank is supposed to maintain. Increases in university fees were offset by falling fuel prices.
Other economic highlights of the Chancellor's speech included:
- Budget deficit reducing and in surplus by 2011 (deficit and debt lower than our competitors; no further borrowing necessary to pay for extra spending)
- Greater sale of Government assets, such as land and buildings, to be examined
- Greater enforcement of minimum wage (50% increase in enforcement budget)
- Greater investment in education (90% of adults with 5 or more GCSEs by 2020; 4m adults with A-level or equivalent by 2020)
- Sir Digby Jones to advise government on greater employer investment in employee training
- Investment in transport will reach £9.6bn next year (Government to consult of new planning authority for infrastructure projects)