Wednesday 26 October 2016

UK leaves 2015 growth forecast unchanged, Osborne does U-turn on tax credit cuts

Published 25/11/2015 | 13:28

British Chancellor of the Exchequer George Osborne. Photo: PA
British Chancellor of the Exchequer George Osborne. Photo: PA

Britain left its official growth forecast for 2015 unchanged and increased its 2016 forecast slightly on Wednesday as Chancellor George Osborne gave a half-yearly budget update.

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Growth for 2015 was forecast to be 2.4pc as forecast in July, Osborne told parliament, and for 2016 it was increased slightly to 2.4pc from 2.3pc in its July forecast.

The budget deficit forecast for the current financial year was lifted to 3.9pc of gross domestic product from 3.7pc previously predicted in July.

Mr Osborne, delivering a half-yearly budget statement, stuck to his plan to wipe out the deficit and achieve a £10bn pound surplus by 2019/20.

"Even with the weaker global picture, our economy this year is predicted to grow by 2.4pc, growth is then revised up from the Budget forecast in the next two years," he said.

Mr Osborne scrapped plans to reduce state support for low-income workers on Wednesday, saying improved public finances meant he could deliver his overall £12bn pound welfare savings without the cuts.

Last month, Osborne was forced to back down on a proposal to reduce the payment of so-called tax credits, which supplement the income of low-paid workers, after it was rejected by Britain's unelected upper house of parliament

"Because I've been able to announce today an improvement in the public finances, the simplest thing to do is not to phase these changes in, but to avoid them altogether".

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