2% growth for each of the next five years

THE CHANCELLOR said the economy will grow by almost 2% for each of the next five years. He said the Office of Budget Responsibility (OBR) also forecast there would be no double dip recession.

The economy will grow 1.8% this year, 2.1& in 2011, then 2.6%, 2.9%, 2.8% and then 2.7% in 2015.

Employment is forecast to grow every year of the current parliament. The OBR expect unemplyment to be 7.9% instead of 8.1% this year. It will be 6% by the end of the parliament.

The chancellor said: “Our decisive actions have proved to the world that Britain can live within her means.”

update 15:50.

KPMG chief economist Andrew Smith said: “Even though growth this year has been revised up, the theory that private sector demand will strengthen as the government retrenches is still to be put the test. Despite downward revisions to income growth, the OBR’s assumption is that the household sector is learning to live with high debt levels and will be prepared to save less to support spending.

“More broadly, rebalancing hopes are still alive – exports and investment are expected to take up the slack as government spending falls. Thus the OBR stuck to its relatively upbeat profile of strengthening growth in the next few years, even as the fiscal squeeze bites in earnest”

update 15:52

Shadow chancellor Alan Johnson claims the OBR report actuallys says that forecasts are “likely to be wrong”.

He adds that Alistair Darling, the former chancellor, and his balanced approach to the economy that has produced growth.

In explaining the government’s spending cuts are still to be implemented, Johnson said: “The chancellor is in the casino but hasn’t spun the wheel yet.”