Economy

Budget 2017: United Kingdom growth forecast cut sharply

Budget 2017: United Kingdom growth forecast cut sharply”

Sterling recovered losses it suffered during the delivery of Britain's budget on Wednesday to trade slightly higher, with traders seeing little - even in downward growth forecasts - that dramatically changed the picture for the economy.

The Office of Budget Responsibility in the United Kingdom announced an expected drop in economic growth of 0.5 percent in its 2017 budget summary.

Growth is then expected to fall to 1.4% next year, 1.3% in each of the two following years before rising to 1.5% in 2021 and 1.6% in 2022.

At the time of the 2017 Spring Budget in March, the OBT updated its predicted tax take on pension freedoms withdrawals to £1.6 billion in 2017-18 (£1.1 billion in 2016-17 and £1.5 billion in 2015-16).

But the pound recovered to trade at $1.3262 after Hammond finished speaking, up 0.2 percent on the day and up from the $1.3241 it had been trading at before the statement.

In his Budget speech, the Chancellor, Philip Hammond, said: "Regrettably our productivity performance continues to disappoint".

The OBR says in its Economic and Fiscal Outlook report that the impact of lower productivity means that GDP will grow by 5.7% over the next five years rather than by the 7.5% as it estimated in March.

However, the figure has now been revised down to 1.5 per cent in 2017, 1.4 per cent in 2018 and 1.3 per cent in 2019.

On unemployment, the OBR said it believed the rate was now as low as it is going to go.



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