UK Government Reduces Growth Forecast

The government is contemplating a tougher year ahead after the independent Office for Budget Responsibility (OBR) revised down the prospects for the UK economy.

Contraction in 2012 will be -0.1%, the OBR predicted, down from the 0.8% growth predicted at the last budget in March.

The OBR forecasts growth next year will be 1.2% – down from the previous prediction of 2%. The forecast for 2014 puts the UK’s growth at 2%, from the previous 2.7% figure. Growth is forecast to rise to 2.8% by 2017.

The chancellor has struggled to maintain a steady course after a year of stop-go economic figures that has seen the UK suffer a double-dip recession, a sharp recovery in the third quarter of the year and a series of surveys in recent weeks showing growth falling back again.

The OBR, which was set up by the chancellor George Osborne two years ago to provide the Treasury with independent forecasts, has revised down its growth forecasts since last year when it was confident of a strong recovery. Some MPs have become agitated at its poor record, which has proved to be consistently over-optimistic.

via The Guardian

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