Economic forecasters in Britain have suffered another blow to their credibility, being set to reverse a sharp growth downgrade and admit the country is in line for a £15 billion windfall.
The Office for Budget Responsibility (OBR) downgraded Britain’s prospects abruptly in November 2017, to the delight of EU loyalists who have been seizing on any economic bad news since the recession and mass job losses they threatened in the event of a Leave vote failed to materialise.
But the OBR is now expected to reverse its predictions after a surging services sector posted its fastest-rising profit gains since November 2015, the Telegraph reports.
Planes, Trains, and Automobiles: Britain’s Post-Referendum Economy Still Going Strong https://t.co/XTEfuly7Mq
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“I expect the OBR will have to upgrade its growth forecasts by 0.3 percentage points in each year, so around 1pc over the next three years,” said Martin Beck of the EY Item Club.
“An extra 1pc GDP growth translates to a smaller deficit of roughly 0.7pc, which gives the Chancellor a bigger margin against his fiscal rule. It should come in at around £30bn at the end of the forecast period, up from the projected £15bn in November.
“The OBR may have turned negative on productivity at just the wrong time, as the latest two quarters of higher productivity growth are the strongest since 2008, so they might have to backtrack on that as well.”
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Even the EU-funded Confederation of British Industry (CBI), which represents big business interests largely in favour of the EU’s corporatist system, has been forced to acknowledge that the economic outlook is positive — despite the fact that uncertainty is probably as bad as it can get, with the referendum decided but Britain’s eventual relationship yet to be determined.
“It’s great to see the services sector start the year off on a firm footing,” said CBI chief economist Rain Newton-Smith.
“Despite feeling the pinch from high inflation, business volumes have bloomed, profits have grown for the first time in over two years and hiring is on the up.”