Britain to publish latest economic growth forecasts

29th November 2010, Comments 0 comments

Britain will unveil its latest official growth and borrowing forecasts later Monday amid hopes the economy is faring better than expected despite the government's ongoing austerity drive.

The independent Office for Budget Responsibility (OBR) will update its economic predictions at 1300 GMT.

And finance minister George Osborne will address parliament with his autumn statement at 1530 GMT, one day after holding emergency talks with European counterparts to thrash out an 85-billion-euro bailout of Ireland.

The OBR had forecast in June that gross domestic product (GDP) would grow by 1.2 percent in 2010, before strengthening by 2.3 percent in 2011 and by 2.8 percent in 2012.

Experts at accountancy firm Ernst & Young predict that the 2010 estimate could be lifted to 1.7 percent. The economy had emerged from a record-length recession late last year.

"Since the OBR's forecast in June, we've seen an impressive recovery in the economy and a particularly impressive recovery in tax revenues, which will undoubtedly be reflected in a more optimistic outlook," said Peter Spencer, chief economic advisor at Ernst & Young's ITEM Club.

However, some commentators predict that subsequent growth estimates could be clipped.

"While the OBR will almost certainly revise up its forecast for economic growth this year, its medium-term forecasts look highly optimistic and may be revised down," added Deutsche Bank economist George Buckley.

In addition, the watchdog could also lower its estimate of public-sector job losses arising from the harsh austerity drive.

"ITEM predicts that the OBR could revise its estimates of public sector job losses down from 490,000 to around 400,000 -- saving 90,000 jobs that would otherwise have been lost," added E&Y in a statement.

Last month, Chancellor of the Exchequer Osborne unleashed the biggest public spending cuts for decades as he sought to curb a huge deficit -- but sparked concern from some quarters that Britain could be pushed back into recession.

Osborne unveiled plans to axe almost half a million public sector jobs, slash budgets and welfare benefits.

The OBR watchdog was set up by British Prime Minister David Cameron earlier this year, after his Conservative-Liberal Democrat coalition government ousted the previous Labour administration in May.

Cameron's coalition will unveil its next annual budget on March 23 next year.

© 2010 AFP

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