Economic And Fiscal Outlook: March 2014
- Office for Budget Responsibility (OBR)
- TSO (The Stationery Office)
The report 'Economic And Fiscal Outlook: March 2014 (Cm. 8220)' sets out forecasts for 2018-19, and updates assessments of whether the Government is on course to meet its medium-term fiscal objectives.
In the final quarter of 2013, GDP growth matched the December forecast, inflation fell back to target and unemployment dropped more quickly than expected. However, productivity and wage growth remained disappointing. Consumer spending, supported by a falling saving ratio, has been the biggest driver of recent growth, while the latest data suggest business investment is recovering. Housing market indicators have picked up sharply but export performance remains disappointing. Given the momentum the GDP forecast has been revised up slightly to 2.7% in 2014 and 2.3% in 2015.
The outlook for productivity growth, which underpins income growth and the sustainability of the recovery, remains the key uncertainty. Inflation is expected to remain close to target and unemployment to continue falling though at a slower pace. Combining a narrower output gap with the slightly stronger GDP growth forecast, it is now expected that the economy return to normal capacity by mid-2018.
Public sector net borrowing (PSNB) is expected to be £3.4 billion lower than the December forecast. Borrowing is forecast to fall by a further £12.4 billion in 2014-15 moving below £100 billion for the first time in six years. The largest drivers to the downward revisions are an upward revision to stamp duty receipts and downward revision to debt interest costs.
A number of budget measures have markedly different implications for revenue, including:
the pensions withdrawals measure;
the temporary annual investment allowance increase; and
accelerated payments related to tax avoidance.
|Format||Paperback||Published||19 Mar 2014|
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