UK growth forecast rises
THE Office for Budget Responsibility delivered some welcome news to coincide with the Chancellor’s Budget when it said it was revising up its forecast for UK growth.
The independent body said that despite the crisis in the Eurozone it was predicting growth of 0.8% this year – 0.1% above previous forecasts.
The forecast for 2013 is 2%, rising to 2.7% in 2014 and in each of the years after that until the end of the Parliament by 3%.
Tim West, tax partner at Ernst & Young in Leeds, said: “The key issue was the deficit. The Ernst & Young Item Club predicted a £7bn reduction in borrowing but he only talked about £1bn.
“The growth forecasts and inflation forecasts were largely what we were expecting. Given his absolute commitment to dealing with the deficit we couldn’t have expected much more.
“In some respects it was almost like a Labour Chancellor talking about taxing the wealthy.”
In contrast to the UK, the OBR considers the debt crisis in the Eurozone to be gloomier than previously forecast.
It has predicted growth in the continent’s economies will be 0.2% lower at 0.35%.
In a further boost to the UK, inflation is predicted to continue falling, from 2.8% this year to 1.9% next year.
