By Vivienne Russell | 19 March 2014
The size of the UK economy is set to return to its pre-recession level this year, Chancellor George Osborne said today as he set out latest Office for Budget Responsibility growth forecasts.
In his Budget statement, Osborne said the OBR had again revised its growth expectation for 2014 to 2.7%. This is up from 1.8% expected in last year’s Budget and the 2.4% predicted in December’s Autumn Statement.
‘That’s the biggest upward revision to growth between Budgets for at least 30 years,’ he said.
‘Later this year the OBR expects Britain to reach the point when our economy is finally larger than before it collapsed six years ago. That’s because we’re now growing faster than Germany, faster than Japan, faster than the US – in fact there is no major advanced economy in the world growing faster than Britain today.’
According to the OBR, growth will reach 2.3% next year and 2.6% in both 2016 and 2017 and is set to return to its long-term trend of 2.5% in 2018.
On the public finances, Osborne said the OBR had revised down the size of the deficit this year to 6.6% of gross domestic product. Next year it is expected to fall to 5.5% and continue reducing until it reaches 0.8% in 2017/18.
‘In 2018/19, they are forecasting no deficit at all – instead, at plus 0.2%, a small surplus,’ the chancellor told MPs. ‘But only if we stick to the plan.’
Borrowing is expected to be £108bn this year, £12bn less than was forecast a year ago, Osborne said. In 2014/15 it is predicted to fall to £95bn, then to £75bn, £44bn, £17bn and, in 2018/19, a small surplus of £5bn.
‘Taken together, these new figures mean Britain will be borrowing £24bn less than was forecast. That’s more than we spend in an entire year on the police and criminal justice system.
‘Lower borrowing and a smaller deficit mean less debt. While we meet the debt target one year late as before, the OBR have revised down national debt in every single year of the forecast.’
Falling debt meant a £42bn reduction in interest payments to government makes on its debt, the chancellor added. This was equivalent to £2,000 for every family in the nation.
