15 June 2010 #Employment
The Office for Budget Responsibility (OBR) has released its prediction that the economy will expand by only 2.6% in 2011. This is down from the 3% to 3.5% estimate given in Labour`s last Budget.
The Office for Budget Responsibility (OBR) is the new financial watchdog set up by the then opposition Conservative government. It is responsible for providing an independent assessment on the state of the public finances.
The OBR has also stated, however, that the deficit and debt will not be as bad as was previously expected. It predicts that the UK`s public deficit will fall to 10.5% of GDP in the 2010 to 2011 financial year. This is down on Labour`s estimate of 11.1%.
For overall net government debt, the OBR estimates that this will be lower than the previous estimate of 63.6% of GDP, at 62.2% in 2010 to 2011.
The OBR however has reported some bad news. It says the structural deficit (which is not automatically reduced by economic growth) will widen from the Labour prediction of 7.3% of GDP in 2010 to 2011 to 8%.
Despite downgrading the growth figures, Sir Alan Budd, the OBR Chairman, said he did not think the recession had caused any "permanent damage" to the economy.