The Government’s financial watchdog, the Office for Budget Responsibility (OBR), has cast its own gloomy light on the Budget.
The OBR has the job of performing an independent check of the Chancellor’s budgetary numbers, albeit with plenty of assistance from HM Treasury. The work requires a range of assumptions and projections for the UK economy which make interesting, if not comforting, reading:
- The OBR expects growth over the course of 2013 to be 0.6%, half of what it forecast at the time of the Autumn Statement in December. It has also revised its estimate of growth in 2014: instead of 2%, the OBR now expects 1.8%.
- In spite of all the austerity, the OBR says the Government’s underlying annual borrowing (the deficit) will be “very close to £120 billion in 2011-12, 2012-13 and 2013-14”.
- Inflation, as measured by the consumer prices index (CPI), will remain above the Bank of England’s 2% target until 2016. In the light of recent comments from Sir Mervyn King, the Bank would probably agree.
- Average earnings growth will at last overtake CPI inflation in 2014 and reach the dizzy heights of 4% a year by 2016.
If all your investments are in the UK, the OBR should have given you pause for thought!
11th April 2013