Budget March 2011: Economic overview
Wednesday 23rd March 2011
UK economic growth forecasts were downgraded from 2.1% to 1.7% for 2011, and from 2.6% to 2.5% for 2012, which the Office for Budget Responsibility (OBR) put down to the weaker than expected final quarter of last year, the rise in world commodity prices, and higher than expected inflation. However, the OBR said that the effect ‘creates scope for slightly stronger growth in later years’.
Meanwhile, inflation, which is currently at a two-year high, is predicted to stay between 4% and 5% this year, falling to 2.5% in 2012. The Chancellor confirmed that the target for Consumer Price Index (CPI) inflation will remain at 2%.
National debt is expected to be 60% of GDP this year, rising to 71% in 2012 and falling to 69% by 2015. Borrowing is expected to fall from £146 billion this year to £122 billion next year, reaching £29 billion by 2015/16.
The Chancellor also revealed that the OBR will become a permanent fixture.