— Adds Detail To Version Transmitted At 1241GMT
— 2011 GDP Downgraded to 1.7% vs 2.1% Seen In November – OBR
— 2012 GDP Forecast 2.5 vs 2.6% Seen In November – OBR
— 2013 GDP Forecast 2.9 Same As Seen In November – OBR
— 2014 GDP Forecast 2.9% vs 2.8% Seen In November -OBR
LONDON (MNI) – The UK’s Office for Budget Responsibility has
downgraded its official growth forecast for 2011 to 1.7%, down from the
2.1% forecast in November 2010, Chancellor of the Exchequer George
Osborne revealed as part of his first March budget.
The Chancellor said that the downgrade was due to a
weaker-than-expected Q4 2010 GDP outturn, high commodity prices and high
inflation.
“Although average quarterly growth this year is set to be higher
than was previously forecast, the annual forecast for 2011 has been
revised to 1.7%. This the OBR attributes specifically to the weaker than
expected final quarter of last year, the rise in world commodity prices
and the higher-than-expected inflation in the UK,” Osborne said.
“However, the OBR point out that the effect, in their words,
“creates scope for slightly stronger growth in later years” than
previously forecast. So while they expect real GDP growth of 2.5% next
year, they forecast it will then rise: to 2.9% in 2013; To 2.9% in 2014;
Followed by 2.8% in 2015,” Osborne added.
The downgrade for 2011 brings the official forecast of growth for
2011 closer to consensus. The UK Treasury’s March comparison of
independent forecasters’ produced average forecast of 1.8% growth in
2011.
A downgrade to the growth forecast had been widely anticipated
following disappointing Q4 GDP figures which showed the UK economy
contracted 0.6% in the final quarter of 2010.
The forecasts are made by independent fiscal watchdog the Office
for Budget Responsibility, which took over the role of forecasting from
the government following last year’s general election.
–London newsroom: 4420 7862 7492; email: wwilkes@marketnews.com
[TOPICS: M$B$$$,MFB$$$,MABDS$,MT$$$$,MFBBU$]
