Budget 2016: Chancellor cuts growth forecasts
16 March 2016
Author: Rupert Saunders
As widely anticipated, the chancellor of the exchequer was forced to concede in his Budget speech that UK economic growth has slowed sharply since he gave his autumn spending statement last November.
In the latest figures from the Office of Budget Responsibility (OBR) the economic growth forecast for this year has dropped from 2.4% to 2.0% and, for 2017, it has dropped from 2.5% to 2.2%. It then levels out at 2.1%, roughly 0.3% below previous estimates.
Despite the slowing growth, the chancellor still claimed he would be able to balance the nation's books and deliver a surplus in the economy by 2019/20. To do this will require a huge £30bn turnaround in net borrowing over the period 2018/20.
He said the UK economy is "set to grow faster than any other major advanced economy" in the world and promised he was delivering "long term solutions to long term problems".
Osborne slated in a £3.5bn reduction in spending by 2019/20 but gave no details of how that would be achieved. A further £12bn is to come from yet more tax avoidance measures.
Under the revised figures, Government net borrowing is slightly down in the current financial year and continues to fall over the next five years, but at a slower rate than previously suggested. It will be £55.5bn in 2016/17 (was £49.9bn), £38.8bn (was £24.8bn) in 2017/18 and £21.4bn (was £4.6bn) in 2018/19.
According to the OBR, the headline CPI inflation rate for this year is now predicted to be 0.7% and next year it will rise to 1.6%. The Chancellor confirmed that the Bank of England target of 2.0% would remain.