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Budget 12: OBR nudges up UK growth forecasts

The Office of Budget Responsibility has raised its growth forecast for 2012 from 0.7 per cent to 0.8 per cent and says that Government borrowing will fall more quickly than expected.

Data released by the independent forecaster alongside the Chancellor’s Budget predicts the economy will grow by 0.8 per cent in 2012 and 2 per cent in 2013. It says the economy will grow by 2.7 per cent in 2014, 3 per cent in 2015 and 3 per cent in 2016.

Delivering the Budget in the House of Commons this afternoon, Chancellor George Osborne said: “The OBR expects that the UK will avoid official recession.”

At the time of the autumn statement in November, the forecaster expected growth of 0.7 per cent in 2012 and 2.1 per cent in 2013. It said the economy would grow by 2.7 per cent in 2014, 3 per cent in 2015 and 3 per cent in 2016.

The Economic and Fiscal Outlook also shows that Government borrowing will fall more quickly than previousl expected. It predicts borrowing for 2011/12 will be £126bn, falling to £21n in 2016/17. The OBR’s November forecast expected Government borrowing to fall from £120bn this year to £24bn in 2016/17.

The OBR says public borrowing will be £120bn in 2012/13, £98bn in 2013/14, £75bn in 2014/15, £52bn in 2015/16, and £21bn in 2016/17. In November it said those figures would be £120bn in 2012, £100bn in 2013, £79bn in 2014, £53bn in 2015, and £24bn in 2016.

Osborne said: “This is £11bn less borrowing than forecast in November and the money will be used to pay down Governewmnt debt.”

The size of the state as a share of GDP will also fall from 48 per cent in 2010 to 43 at the end of the parlaiment in 2015.

For Money Marketing’s full coverage of the Budget click here.

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