LONDON (Alliance News) – Chancellor George Osborne has seen UK economic growth forecasts slashed amid a “cocktail of risks” from the global economy, but the Chancellor stuck to his target of hitting a budget surplus by 2020 by rolling out GBP3.5 billion worth of spending cuts over the next four years.
Osborne said new independent forecasts from the Office for Budget Responsibility (OBR) show that the UK would have a budget surplus of GBP10.4 billion in 2019/20 and GBP11 billion in the following year.
But the debt and GDP forecasts mean Osborne has missed his target of starting to cut the national debt as a percentage of output this financial year, according to the OBR.
He said the economic picture for the UK was still “strong”, but revealed the OBR forecasts for the UK economy had been downgraded amid a cocktail of risks triggered by slowing growth in China, the emerging markets and prolonged market volatility.
The OBR has downgraded its forecast for gross domestic product (GDP) for 2.4% to 2% this year, from 2.5% to 2.2% in 2017, from 2.4% to 2.1% in 2018 and from 2.3% to 2.1% in both 2019 and 2020.
However, the OBR said the forecasts were made on the assumption that Britain would remain in the European Union following the forthcoming referendum.
The OBR stated: “There appears to be a greater consensus that a vote to leave would result in a period of potentially disruptive uncertainty while the precise details of the UK’s new relationship with the EU were negotiated.”
The OBR has also forecast lower inflation, at 0.7% this year and 1.6% next year.
New forecasts show that public sector net borrowing will hit GBP72.2 billion for 2015/16, lower than the GBP73.5 billion figure previously announced in the Autumn Statement.
But OBR forecasts show that debt will now shrink more slowly than previously predicted, reaching GBP55.5 billion in 2016/17 compared to forecasts in November of GBP49.9 billion.
It is also now predicted to fall to GBP38.8 billion in 2017/18, GBP21.4 billion in 2018/19, before reaching the surplus of GBP10.4 billion in 2019/20.
“Britain has learnt to its cost what happens when you base your economic policy on the assumption you have abolished boom and bust. Britain is not immune to slowdowns and shocks,” Osborne said.
“Nor as a nation are we powerless. We have a choice. We can choose to add to the risk and uncertainty, or we can be a force for stability,” he added.
By Ben Woods, Press Association Chief City Correspondent
Source: Press Association
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