Monday, November 29, 2010
OBR says growth will survive the cuts
Posted by David Smith at 01:40 PM
Category: Thoughts and responses

There's plenty in the Office for Budget Responsibility's updated forecast for the economy, but the headlines are these: Growth is revised higher for this year (up from 1.2% to 1.8%) but slightly lower for subsequent years. 2011 will see growth of 2.1% (down from 2.3%), while 2012 is trimmed from 2.8% to 2.6%. The OBR expects the economy's weakest spot to be in the first quarter of 2011, when growth slows to 0.3%. No double-dip, just a slowdown.

The OBR has revised down projected job losses by more than expected, from 490,000 to 330,000. This is the relevant paragraph:

"With the Government deciding in the Spending Review to reduce somewhat its planned cuts in public services spending, by announcing additional cuts in welfare spending, we expect general government employment to fall by 330,000 over the next four years, compared to the 490,000 predicted by the interim OBR in June. We estimate that the Government’s plans to freeze real total public spending in 2015–16 imply a further 80,000 fall in that year, in the absence of further cuts in welfare or other annually managed spending."

Overall, a forecast of growth led by business investment and net exports. While the OBR says the recovery will be slower than after the recessions of the 1970s, 1980s and 1990s (it has been stronger so far), this is still a promising outlook. There's plenty of detail in the report, available here.