The first growth and public finance forecasts from Britain’s new Office for Budget Responsibility are out and — as expected — they’re lower than the last predictions, made in March.
Britain’s economy is forecast to grow 2.6 per cent in 2011, compared to the previous estimate of 3.25 per cent. Flashes via Reuters — first on GDP:
RTRS-UK OBR – GDP GROWTH FROM 2011 SEEN LOWER THAN IN MARCH BUDGET
RTRS-UK OBR – GDP GROWTH SEEN AT 0.6 PCT Q2 2010, 0.7 PCT Q3, 0.7 PCT Q4, 0.6 PCT Q1 2011, 0.6 PCT Q2 2011
RTRS-UK OBR – GDP GROWTH SEEN AT 1.3 PCT 2010, 2.6 PCT 2011, 2.8 PCT 2012, 2.8 PCT 2013, 2.6 PCT 2014
RTRS-UK OBR SAYS UK TREND OUTPUT GROWTH SEEN AT JUST OVER 2.25 PCT UNTIL 2014, THEN FALLING TO JUST OVER 2 PCT
While as for public sector net borrowing:
RTRS-UK OFFICE FOR BUDGET RESPONSIBILITY – 2010/11 PSNB SEEN AT 155 BLN STG VS 2010 BUDGET FORECAST OF 163 BLN
RTRS-UK OBR – BORROWING PROFILE SLIGHTLY LOWER FROM 2010/11 TO 2014/15 THAN IN MARCH BUDGET
RTRS-UK OBR – SEES PSNB 2011/12 127 BLN STG, 2012/13 106 BLN, 2013/14 85 BLN, 2014/15 71 BLN
RTRS-UK OBR – NET BORROWING AS PCT OF GDP SEEN AT 10.5 PCT IN 2010/11, FALLING TO 3.9 PCT IN 2014/15
RTRS-UK OBR – CYCLICALLY ADJUSTED NET BORROWING HIGHER AS PCT OF GDP THAN IN MARCH BUDGET
Meanwhile the report itself notes what could change these forecasts:
A major uncertainty relates to developments in credit and financial markets, in particular whether the banks are able or willing to supply credit in the amount that is normally required in the recovery phase of the economic cycle; and, if not, whether that credit can be obtained elsewhere. Another major area of uncertainty is whether, and to what extent, private sector spending and employment are able to fill the gap that the cuts in public spending in our forecast leave. The prospects for external demand are also uncertain since the outlook for the euro area is particularly opaque at this time.
Related links:
UK watchdog slashes growth forecast – FT
Sterling in the spotlight – FT Alphaville