According to the Budget, once we get beyond 2009/10 year GDP is predicted to fall by 3.5 per cent, we will have growth of 1.25 per cent in 2010/11 and back up to 3.5 per cent growth in 2011/12.
In the November pre Budget report, Alistair Darling had to cut back the estimates for 2009/10 growth from an incredible 2.75 per cent to between -0.75 and -1.25 per cent. But despite the massive difference in the predictions for this tax year, the future years look rosy. In fact, the new figure for 2011/12 has gone up to 3.25 per cent.
In black and white, these figures do not look that terrifying until you remember these small differences will represent billions and billions of pounds. The eye-watering levels of borrowing that the Government is going to need are going to be supported by these growth figures.
By contrast, the IMF, which seems to look rather more gloomily at the UK, thinks this year, GDP will fall by 4.1 per cent and it will fall by 0.4 per cent next year. That is a difference of almost 2 per cent of the UK’s GDP.
Let’s hope the Government’s Del Boyesque stance of “this time next year we’ll be millionaires” holds true or taxes will have to rise even further.