FINANCIAL NEWS

Britain’s budget office slashes economic outlook

14 Jun 2010

(MENAFN) UK’s new Office for Budget Responsibility offered a dreary outlook in its first forecasts for the country’s economic growth and public finances, predicting 2.6 percent economic growth in 2011, down from the 3.25 percent estimated by the previous government, AP reported.

The agency, established by Prime Minister David Cameron’s coalition government, also surprised analysts by expecting that total borrowing between this year and 2015 will be $32.4 billion lower than former Prime Minister Gordon Brown’s government had predicted in March.

Gerard Lane, analyst at Shore Capital, said that each 1 percent off economic growth results in an additional 10 billion on the public borrowing number. He also said that more borrowing would mean more pressure on the government to cut spending and raise more revenue.

It is worth mentioning that UK racked up a record public sector deficit of $229 billion in the previous fiscal year which ended April 5.

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