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Gloomier forecast for UK economy
Source: Agencies |
November 30, 2011, Wednesday
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Print Edition
Print Edition
THE British government has revealed a gloomier outlook about the economy, but said the pain will be worse if eurozone countries do not solve their sovereign debt crisis.
Treasury chief George Osborne yesterday said the Office for Budget Responsibility expects the economy to grow by 0.9 percent this year, down from its March forecast of 1.7 percent.
For next year, the OBR predicts growth of 0.7 percent, sharply down from the 2.5 percent prediction in March.
Osborne told the House of Commons that the forecast assumes there will be a solution of the eurozone turmoil.
"A more disorderly outcome is clearly possible," the OBR said.
"Even though we believe there is an equal chance that growth will come in above or below our central forecast, the probability of a much worse outcome than the central forecast is greater than the probability of a much better one," the OBR added.
Osborne said he still expects to meet his deficit-reduction target by 2015.
Osborne announced he was raising the bank levy - charged against the balance sheets of major banks - from 0.075 percent to 0.088 percent, but he repeated his opposition to a tax on financial transactions, calling that "a tax on pensions."
As previously announced, he committed 20 billion pounds (US$31 billion) to a program to guarantee bank loans to small and medium-sized businesses. The guarantee applies to banks' wholesale borrowing to fund business loans; banks would still have to absorb any losses from bad loans.
Treasury chief George Osborne yesterday said the Office for Budget Responsibility expects the economy to grow by 0.9 percent this year, down from its March forecast of 1.7 percent.
For next year, the OBR predicts growth of 0.7 percent, sharply down from the 2.5 percent prediction in March.
Osborne told the House of Commons that the forecast assumes there will be a solution of the eurozone turmoil.
"A more disorderly outcome is clearly possible," the OBR said.
"Even though we believe there is an equal chance that growth will come in above or below our central forecast, the probability of a much worse outcome than the central forecast is greater than the probability of a much better one," the OBR added.
Osborne said he still expects to meet his deficit-reduction target by 2015.
Osborne announced he was raising the bank levy - charged against the balance sheets of major banks - from 0.075 percent to 0.088 percent, but he repeated his opposition to a tax on financial transactions, calling that "a tax on pensions."
As previously announced, he committed 20 billion pounds (US$31 billion) to a program to guarantee bank loans to small and medium-sized businesses. The guarantee applies to banks' wholesale borrowing to fund business loans; banks would still have to absorb any losses from bad loans.
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