UK growth forecast cut by OBR - Economy - News - Moneyfacts

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UK growth forecast cut by OBR

UK growth forecast cut by OBR

Category: Economy

Updated: 14/06/2010
First Published: 14/06/2010

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.
The government's new independent fiscal watchdog has announced that the UK will grow by less than was forecast by the previous administration.

In Labour's last Budget, it was predicted that the UK economy would expand by between 3% and 3.5% in 2011.

However, the Office for Budget Responsibility – formed just last month by the coalition Government to deliver independent forecasts – has said that the UK will, in fact, grow by 2.6% next year.

Despite the downward revision, the OBR announced that the public deficit and debt is unlikely to be as bad as was originally forecast.

Stephen Robertson, British Retail Consortium director general, said: "There's nothing to be gained from hiding the severity of this national financial crisis or the scale of the measures needed to get to grips with it.

"An honest and effective plan to tackle the public finances needs this more objective approach even though it confirms our fears about the where the economy really is.

"The OBR's figures are closer to our own analysis. They better reflect reality and show that the Government must follow through on even bigger spending cuts than announced so far."

The new estimates come on the back of weak growth figures, which suggest that the economy is not recovering as quickly as some had hoped.

The Con-Lib coalition is to deliver its first Budget next week, with measures expected to set out where wide-ranging cuts will be concentrated.

A rise in VAT has also been rumoured, although it is unclear when this will be announced.

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