The economy – an overview
The public finances look rosier than expected, thanks mainly due to higher than expected tax revenues and lower borrowings (£8bn lower than planned).
The Chancellor’s figures came courtesy of the independent Office for Budget Responsibility; Gross Domestic Product (UK’s income) grew by 2.4% in 2015 and is set to continue at a similar pace for the rest of the forecast period until 2020, where growth is predicted to be 2.3%.
This, combined with the news that 1m extra jobs will be created over the next 5 years puts the UK in first place for fastest growing economy in the developed world. Little details over the type of jobs though (full or part-time?).
Inclusion of housing Association stats in the public sector figures had a slight impact on borrowing and debt figures but the overall picture remained relatively unchanged.
The government is due to run a surplus of £10.1bn by 2019/20, bigger than previously expected; there is currently a deficit of £73.5bn.
Real wages are growing by rates not seen since before the recession and unemployment rate fell to 5.3% in September 2015, the lowest rate in 7 years. Again, much has been made of the fact that the labour market has been stimulated by more part-time jobs and those without the security of an employment contract.
Public spending is expected to stabilise and increase each year in line with economic growth. The main areas of spending will be on national security and key public services, in addition to long term capital infrastructure..