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OBR downgrades growth forecasts

Date: 15 December 2011

Public sector pay restraint and the likelihood of further industrial disruption is the price Britain will have to pay for the current economic crisis.

The reason is slow economic growth and much higher borrowing over the next few years, according to chancellor George Osborne.

The Office for Budget Responsibility, which provides an independent forecast of economic activity, has severely downgraded its growth forecasts for the next three years. It now says

GDP growth this year will be 0.9% (down from 1.7% at the time of the spring budget); 0.7% in 2012 (down from 2.5%); and 2.1% in 2013 (down from 2.9%).

Public borrowing will rise as a result and the Government will have to borrow an extra £113bn over the next five years.