In his Spring Statement speech, Chancellor Philip Hammond responded to the latest forecasts as published by the Office for Budget Responsibility (OBR).
The OBR forecasts that the UK economy will grow at a faster pace than previously predicted, anticipating that GDP growth will be 1.5% in 2018 – a rise from the figure of 1.4% that was previously predicted.
However, the OBR predicts that growth will slow in 2019, subsequently picking up over the following three years. It also revealed that the average growth rate over the forecast remains unchanged from November, at 1.4% a year.
Borrowing is set to fall over the coming years, with last year’s figure of 2.2% of GDP predicted to fall to 0.9% in 2022, with debt as a percentage of GDP also set to fall each year, within the same time frame.
In regard to the UK’s budget deficit, the OBR expects a figure of £45.2 billion this year – £4.7 billion less than previously predicted.
The OBR stated that the government’s headroom against its fiscal targets is ‘virtually unchanged’.