UK sees slower rise in GDP, higher inflation
By Jane Wardell |
March 24, 2011, Thursday
|
Print Edition
Print Edition
THE British government has acknowledged that economic growth will be slower and inflation will be higher this year than previously forecast as it unveiled a tough annual budget yesterday.
Amid growing concern about Britain's shaky recovery from its worst recession since the end of World War II, Chancellor of the Exchequer George Osborne attempted to focus on growth-promoting measures to improve Britain's international competitiveness, including a centerpiece 2 percent cut in corporate tax.
"Let it be heard clearly around the world ... that Britain is open for business," Osborne told lawmakers in the House of Commons.
Britain was in recession longer than the other Group of Seven industrialized nations, and a shock 0.6 percent contraction in gross domestic product growth in the final quarter of last year has heightened fears for the future.
Osborne said the Office for Budget Responsibility has downgraded its forecast for GDP growth for 2011 to 1.7 percent, compared with the 2.1 percent it predicted in November, because of rising commodity prices and the fourth-quarter contraction in GDP.
The agency, created by Osborne last year to keep economic forecasts at arm's length from the government, also sharply raised its inflation forecast to between 4 and 5 percent this year, from 3 percent previously.
But there was some good news, with Osborne revealing that government borrowing will come in at 146 billion pounds (US$237 billion) this year, slightly under the government's target of 148.5 billion pounds.
Osborne and Prime Minister David Cameron have set as their main priority reducing Britain's massive budget deficit over the next few years. Osborne first outlined plans in October to slash 80 billion pounds of public spending over five years, and has already raised sales tax from 17.5 percent to 20 percent.
Amid growing concern about Britain's shaky recovery from its worst recession since the end of World War II, Chancellor of the Exchequer George Osborne attempted to focus on growth-promoting measures to improve Britain's international competitiveness, including a centerpiece 2 percent cut in corporate tax.
"Let it be heard clearly around the world ... that Britain is open for business," Osborne told lawmakers in the House of Commons.
Britain was in recession longer than the other Group of Seven industrialized nations, and a shock 0.6 percent contraction in gross domestic product growth in the final quarter of last year has heightened fears for the future.
Osborne said the Office for Budget Responsibility has downgraded its forecast for GDP growth for 2011 to 1.7 percent, compared with the 2.1 percent it predicted in November, because of rising commodity prices and the fourth-quarter contraction in GDP.
The agency, created by Osborne last year to keep economic forecasts at arm's length from the government, also sharply raised its inflation forecast to between 4 and 5 percent this year, from 3 percent previously.
But there was some good news, with Osborne revealing that government borrowing will come in at 146 billion pounds (US$237 billion) this year, slightly under the government's target of 148.5 billion pounds.
Osborne and Prime Minister David Cameron have set as their main priority reducing Britain's massive budget deficit over the next few years. Osborne first outlined plans in October to slash 80 billion pounds of public spending over five years, and has already raised sales tax from 17.5 percent to 20 percent.
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