Growth forecasts over the medium term revised slightly upwards

The Office for Budget Responsibility (OBR) forecast for 2011 economic growth was revised down to 1.7% from 2.1% as published in November 2010. In contrast, the economic growth forecasts over the medium term have been revised slightly upwards from 2.8% to 2.9% in 2014 and 2015.

More modest growth is likely in each year from 2011 to 2014 because of fragile consumer confidence, public spending cuts, rising global commodity prices and recent problems in Japan and the Middle East.

The OBR’s forecasts for public sector net borrowing for 2010/11 have been revised down slightly from £149bn to £146bn but up slightly to £46bn in 2014/15 (as compared to the £35bn forecast in November 2010). A somewhat slower fall in public borrowing is expected to be around £53bn in 2014/15 due to more subdued economic growth with cumulative borrowing over
the next four years around £20bn higher than in the new OBR forecasts.