The Chancellor, George Osborne has said that the latest economic report from the Office for Budgetary Responsibility (OBR) has shown the economy is on track for recovery.
Mr Osborne was making his autumn statement to the House of Commons. The statement took the place of the pre-Budget Report.
Citing the OBR’s latest forecasts that both employment and GDP will be higher in each quarter and in every year than was predicted in the June forecast, the Chancellor argued that Britain “was on course to both grow the economy and to balance the books”.
Although he cautioned that the OBR figures do not claim “infallible certainty”, the outlook for the UK economy is such that it is “on track” for recovery, Mr Osborne insisted.
With growth rates for the next four years to move between 2.1 per cent and 2.9 per cent, and with unemployment to drop to 6 per cent by the end of this Parliament, the Chancellor said that the OBR’s forecasts were in line with those published by the European Commission for the UK.
The EC predictions suggest that UK growth will be higher than in Germany, Japan and the US, and higher than the average for the Eurozone and the EU.
The Chancellor pointed out that, although growth will be slightly weaker than originally predicted for next year, the overall size of the economy will nevertheless be 0.5 per cent higher next year than previously thought.
The central view of the OBR report is that “there will be no double-dip recession” in the UK.
The Chancellor also highlighted the OBR’s forecasts on rebalancing the economy. The report suggested that business investment will grow by 8 per cent over each of the next four years and that exports will grow on average by over 6 per cent per year, so directing demand away from debt and towards supply.
Mr Osborne went on to argue that the focus of the spending review on benefits savings has meant that the OBR’s initial calculation of 490,000 public sector jog losses will now be reduced to 330,000.
He also welcomed the OBR’s assessment of the jobs market, with its forecast of the creation of one million new public sector jobs by 2015.
The Chancellor said that public sector net borrowing will fall from £148.5 billion in 2010 to just £18 billion in 2015/16.
While government debt as a share of GDP is now projected to hit a peak of 70 per cent in 2013 before sliding back to 67 per cent by 2015.
As a result, the Chancellor said that the government should meet its pledge to eliminate the structural budget deficit by 2014/15.
Mr Osborne also went on to say that the government should save in the region of £19 billion over the course of the Parliament in interest payments as the public debt is reduced.
And he insisted that the OBR report has shown that the government’s plan for recovery is “working” and that the government would “stick to the course”.
