Even taken with a pinch of salt, the Office for Budget Responsibility’s latest economic forecast should bring hope: the economy is growing, more jobs are being created and the deficit is falling. Britain should be back on track.
The Chancellor George Osborne has presented his first Autumn Statement to the House of Commons.
Responding to the Autumn forecast from the independent Office for Budget Responsibility (OBR), Osborne told MPs that Britain was ‘on track’ to recover from the deepest recession of post-war times.
Reassuringly, The OBR’s forecast is very similar to the European Commission’s forecast for the UK, which was published on the same day. It suggests that Britain will grow faster over the next two years than Germany, France, Japan, the US, and the average for the eurozone and the EU.
UK GDP growth is expected to be:
· 1.8% this year
· 2.1% in 2011
· 2.6% in 2012
· 2.9% in 2013
· 2.8% in 2014
· 2.7% in 2015
This year’s growth figure is much more positive than the 1.2% originally predicted, but this increase has led to downward revisions for the following four years. According to Osborne, this situation demonstrates sustainable growth and will prevent a double-dip recession – a view backed by the OBR.
Employment
The biggest news from the OBR’s forecast was confirmation that the Chancellor’s spending review meant that initial estimates of public sector job losses have been reduced by 130,000 jobs (with an additional reduction of 30,000 when you factor in the revised measurement technique used by the OBR).
Tax reform
Building on the sweeping changes made to corporation tax in the Comprehensive Spending Review, Osborne announced that he would step up efforts to support innovation and trade through more reform. For example, there will be a further 10% reduction in corporate tax on profits from patents.
To find out how the corporation tax reforms could affect your business, or to discuss any aspect of financial planning and growth, please feel free to get in touch.
