Forecasts for economic growth have been upgraded in what chancellor George Osborne claimed was the “largest upward revision between Budgets for at least 30 years”.
The Office for Budget Responsibility forecasts, announced in today’s Budget, are now for GDP to grow by 2.7 per cent in 2014, up from the 1.8 per cent previously reported in the 2013 Budget.
However, growth at this year’s pace is not expected to be sutained, with GDP forecast to grow by 2.3 per cent in 2015, and 2.6 per cent in both 2016 and 2017.
Mr Osborne said that Britain was growing faster than Germany, Japan and the US and that “no major advanced economy is growing faster than Britain today” and that taken together the forecasts meant that the country will be £16bn larger than forecast just four months ago in the Autumn Statement.
He also revealed that the OBR had revised downwards the underlying deficit in every year of its forecast, with the deficit now forecast to be 6.6 per cent this year. This is then expected to reduce to 5.5 per cent in 2015, 4.2 per cent in 2016 and 2.4 per cent in 2017.
Meanwhile, the country’s borrowing is forecast to reduce annually in the period to 2019, from £108bn this year to £95bn next year before a surplus of £5bn forecast for 2018/19.
Employment is forecast to grow steadily from 30.2m this year to 31.2m by 2018, while unemployment is expected to reduce to below 6 per cent of the population, at 5.6 per cent by the end of the forecast period.
Mr Osborne said during the Budget that the UK now has a higher employment rate than the US for the first time in 35 years.
The OBR’s forecast document also reveal that forecasts for business investment have been revised upwards since December 2013’s Autumn Statement, from 5.1 per cent this year to 8 per cent. Expectations for business investment in 2013 are for a fall of 1.2 per cent.