Budget 2017 – The UK economy
It came as no surprise that the UK’s economy is faring worse than previously forecast, yet there are some sectors which are performing significantly better than others, namely technology and the digital economy.
The independent Office for Budget Responsibility revised down the UK’s growth forecasts by more than was expected. Productivity isn’t as high as at the previous Budget in March. Growth (Gross Domestic Product) is now forecast as 1.5% in the current year, then 1.4%, 1.3%, 1.5%, then 1.6% in 2021/22. Inflation is running higher at 3% but will then settle down to target after this year.
Debt – due to extra measures taken at the last Budget, debt will peak in 2017 (£49.9bn, or 2.4% of GDP), then fall in successive years to 1.1% in 2022/23, the lowest rate in 20 years.
Inflation is running at 2.7% in 2017, expected to fall to 2% in 2020. This follows the recent decision by the Bank of England to raise interest rates from an historic low of 0.25% to 0.5%. Wage inflation lags behind, running at 2.3% in 2017, then 2.6% in 2020, so slightly higher than general inflation.