Osborne said the Office for Budget Responsibility forecasts GDP growth of 0.9% for 2011, 0.7% for 2012, and 2.1% for 2013. In both 2015 and 2016 it growth will hit 3%, he expects.
This is a significant revision from the March Budget, which suggested the UK economy would grow by 1.7% during 2011, 2.5% in 2012 and 2.9% in 2012.
Osborne said: “The OBR’s figure predict no recession in Britain, but the short-term growth figures have been revised down. These figures assume the euro area will find its way through the crisis. It it does not, there could be a worse outcome for Britain, and we may find it hard to avoid recession here.”
The March forecast was itself a downward revision from a previous forecast of 2.1% for 2011 and 2.6% for the following year, based on weak growth figures for Q4 2010, rising global commodity prices and higher than expected inflation.
Osborne said the UK is unlikely to enter recession unless Europe sees an economic contraction. He pledge to do everything in his power to prevent the UK recovery from derailing.
Osborne added: “Much of Europe is heading into recession caused by a chronic lack of confidence in countries’ ability to deal with their debts. We will do everything possible to protect Britain from the debt storm. The country has the will to live within its means.”
