LONDON (Reuters) - British finance minister Philip Hammond on Tuesday gave an update on Britain’s finances and economic outlook.
Below is an outline of the main forecasts:
The OBR set out another muted outlook for Britain’s economy. Economic growth is expected to be 1.5 percent in 2018, up from a November forecast of 1.4 percent, and 1.3 percent in 2019 and 2020 - unchanged from the earlier projection.
For 2021 and 2022 forecasts were revised down a touch to 1.4 percent and 1.5 percent respectively.
Overall, growth over the next five years was expected to average 1.4 percent - around half its average rate before the 2007-09 global financial crisis.
Inflation is expected to recede over the next 12 months. Wage growth, which has lagged inflation over the last year, will return in real terms over the next five years.
Borrowing is forecast to be 45.2 billion pounds this financial year, 4.7 billion pounds lower than forecast in November.
That would mean the budget deficit stands at 2.2 percent of gross domestic product (GDP) in 2017/18. It is then expected to fall to 1.8 percent in 2018/19, 1.6 percent in 2019/20 and 0.9 percent in 2022/23 — by which time there would be a small current budget surplus.
Overall public debt as a percentage of GDP is expected to start to falling in the upcoming 2018/19 fiscal year from 85.6 percent of GDP this year, falling to 77.9 percent of GDP in 2022/23.
Hammond said that if Britain’s finances continue to improve there would be potential room for public spending increases later this year.
Hammond also referenced potential measures to tax digital businesses which he said he would discuss with other finance ministers from G20 countries in an upcoming summit.
The government would look at opportunities to use the tax systems to change consumer behaviour on single use plastics and tackle climate change, Hammond said.
The government would also consult on a new value-added tax on online sales.
Reporting by UK bureau; Writing by Elisabeth O'Leary; Editing by Andy Bruce