Summary
The report 'Economic and Fiscal Outlook: March 2011' (Cm. 8036) sets out forecasts for the period to 2015-16 and assesses whether the Government is on course to meet medium-term fiscal objectives.
The organisation that compiled the report, the Office for Budget Responsibility (OBR), was established to provide independent and authoritative analysis of the UK's public finances.
The report also presents preliminary observations on the long-run sustainability of public finances.
Since the November 2010 outlook, the key economic developments have been:
- an unexpected fall in UK GDP in the final quarter of 2010;
- a rise in world oil prices; and
- higher-than-expected UK inflation.
The labour market has performed as expected, with rising unemployment.
The OBR endorses all but one of the costings for the tax and spending measures set out in the 'Budget 2011 (HC 836)' as reasonable central estimates, though there are significant uncertainties around a number of them.
The central forecast for economic growth in 2011 is revised down from 2.1 to 1.7%. On the fiscal outlook, OBR forecasts that in support of national income, public sector net borrowing will decline steadily, but more slowly than forecast in November.
The Government set itself two medium-term fiscal targets:
- to balance the cyclically-adjusted current budget by the end of a rolling five-year period; and
- to see public sector debt falling in 2015-16.
Examining performance against these targets, the OBR believes there is a greater than 50% probability of meeting both targets under current policy.
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