Economic and fiscal outlook March 2012
The Stationery Office, Mar 21, 2012 - Business & Economics - 185 pages
The Office for Budget Responsibility was established to provide independent and authoritative analysis of the UK's public finances. Part of this role includes producing the official economic and fiscal forecasts. This report sets out forecasts for the period to 2016-17. The report also assesses whether the Government is on course to meet the medium-term fiscal objectives. The OBR assessment of the outlook and risks for the UK economy is broadly unchanged since the November 2011 report. A technical recession will be avoided with positive growth in the first quarter of 2012. GDP will grow by 0.8% in 2012, 2% in 2013, 2.7% in 2014 and 3% for 2015-16 period. Public sector net borrowing is forecast to total £126 billion, 8.3% of GDP this year which is £1.1 billion less than the November forecast. For 2016-17, the PSNB is then forecast to decline to £21 billion. The fall in PSNB in 2012-13 is much larger than the OBR's November forecast due to the Government's decision to transfer the Royal Mail's historic pension deficit. The Chancellor's decision to cut 50% additional rate income tax to 45% has an estimated direct cost to the Exchequer of £0.1 billion in 2013-14. Other forecasts by the OBR, include: the ILO unemployment rate to rise from 8.4% to 8.7% over the coming year; household disposable income growth to be weak in 2012-13, but consumption to begin to offer some support to the recovery in the second half of the year; that the situation in the euro area remains a major risk to accurate forecasting. The publication is divided into five chapters: Chapter 1: Executive summary; Chapter 2: Developments since the November 2011 forecast; Chapter 3: economic outlook; Chapter 4: Fiscal outlook; Chapter 5: Performance against the Government's fiscal targest; Annex A - Budget 2012 policy measures.
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Developments since the November 201 1 forecast
Performance against the Governments fiscal targets
50 per cent additional rate adjustment announced assets assume Bank Bank of England business investment CACB cash cent of GDP cent rate central forecast central government claimant count conventional gilts corporation tax costs council tax CPI inflation credit conditions cyclically-adjusted current budget debt interest duty effect estimate euro area expected fall fan chart financial sector fiscal forecast fiscal mandate forecast in November forecast period GDP deflator GDP growth government consumption Gross operating surplus growth in 2012 higher HM Treasury HMRC household impact included income tax increase labour market March forecast medium-term National Accounts November EFO November forecast offset oil prices outlook output gap Outturn Forecast payments percentage points potential output PSGI PSNB PSNCR PSND public finances public sector quarter of 201 reduce reflects revenues Royal Mail scenario sector net borrowing sector net debt supplementary target Table Tax Tax Tax transfer uncertainty unemployment weaker