The Office for Budget Responsbility does not predict a recession in Britain, Chancellor George Osborne has reported in the Autumn Statement.
Short-term growth forecasts have been revised downwards, meaning that GDP is set to grow by 0.9 per cent in 2011 and 0.7 per cent in 2012.
Further growth of 2.1 per cent in 2013, 2.7 per cent in 2014 and 3 per cent in both 2015 and 2016 is forecast by the OBR.
But the OBR’s predictions came with the warning of a “much worse outcome for Britain if the Eurozone did not find a way through the current crisis,” Mr Osborne said.
The Chancellor said bigger booms in inflation than predicted, particularly through unexpected rises in energy and global agricultural commodities prices, and the recession being bigger than expected, with the effects lasting longer than first thought, contributed to the slower growth in the British economy.
But the OBR forecasts that “borrowing will fall and debt will come down,” though “not as quickly as hoped”.
The Chancellor began the Autumn Statement with the observation that most of Europe appears to be going into recession due to “a chronic lack of confidence in the ability of countries to deal with their debts”.
“We will do whatever it takes to protect Britain from this debt storm, while doing all we can to build the foundations of future growth,” he added.