economic and fiscal outlook
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Economic and fiscal outlook. March 2011 Robert Chote, Chairman. Process and independence. Independent Budget Responsibility Committee responsible for assumptions, judgements and conclusions Supported by full-time OBR staff Drawing on data and analysis from HMRC, HMT, DWP etc - PowerPoint PPT PresentationTRANSCRIPT
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Economic and fiscal outlookMarch 2011
Robert Chote, Chairman
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Process and independence• Independent Budget Responsibility Committee responsible for
assumptions, judgements and conclusions
• Supported by full-time OBR staff
• Drawing on data and analysis from HMRC, HMT, DWP etc
• Draft forecast first presented to Chancellor on 14 February to inform Budget policy decisions
• No political pressure to change any conclusions
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Key points: economic outlook• Less underlying momentum in the economy than thought in
November
• High inflation set to squeeze household disposable income
• GDP in 2011 revised down to 1.7% from 2.1%
• Steady recovery continues thereafter, but slower GDP growth than after previous three recessions
• Unchanged view on underlying productive potential of economy
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Less growth momentum in economy even after accounting for effect of snow
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Higher than expected inflation likely to weigh down on real incomes
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GDP revised down to 1.7% in 2011 then expected to recover in medium-term
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Recovery expected to be less strong than after previous recessions
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But a wide range of uncertainty around any economic forecast
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Key points: fiscal outlook• PSNB this year expected to be £145.9bn.
• Then forecast to fall, but higher than in November by around £10bn each year
• Upward revision mainly due to higher spending driven by inflation
• Budget policy measures broadly neutral for borrowing
• More spare capacity in economy so structural deficit is revised up less
• Government to meet fiscal targets, with similar headroom to June
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Borrowing falls over forecast period mainly driven by fall in total spending
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But borrowing profile higher than forecast in November
Outturn
2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16
Public sector net borrowing
November forecast 156.0 148.5 117 91 60 35 18March forecast 156.4 145.9 122 101 70 46 29Change 0.4 -2.6 4 10 10 11 11
£ billion
Forecast
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Impact of Budget measures is overall broadly neutral for borrowing
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Again wide range of uncertainty around fiscal forecast
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But on our central forecast the Government is meeting its fiscal targets