Chancellor George Osborne says annual growth will reach 1.7 per cent in 2011/12, which is lower than the predicted growth of 2.1 per cent.
Osborne says this is due to a weaker than expected final quarter in 2010, global commodity price shocks and high UK inflation.
He said real GDP will increase to 2.5 per cent next year, down slightly from the 2.6 per cent predicted. Osborne said it will grow 2.9 per cent in 2013/14 and 2014/15, then fall back to 2.8 per cent in 2015/16.
Osbourne also said UK inflation will stay between 4.5 and 5 per cent this year, falling back to 2.5 per cent in 2012/13 and 2 per cent in two years’ time.
Yesterday, the Office for National Statistics announced the CPI annual inflation rate in the UK rose to 4.4 per cent in February, its highest level since 2008.
Osborne confirmed the inflation target will remain at 2 per cent.
Government borrowing forecasts to fund the deficit have come in at £146bn for 2011/12, below the Office of Budget’s Responsibility’s predicted borrowing for the year of £148.5bn.
Osborne says the Government is aiming to bring public sector borrowing down to £29bn by 2015/16.
National debt as a propotion of GDP for this year is 60 per cent.