Britain halves economic growth forecast to 0.6 per cent for 2013

Britain today halved its economic growth forecast for 2013, blaming the ongoing impact of the eurozone debt crisis, finance minister George Osborne revealed in his annual budget.

Gross domestic product (GDP) was expected to grow by just 0.6 per cent this year, half the previous forecast of 1.2 per cent, according to estimates issued by the Office for Budget Responsibility (OBR).

“The problems in Cyprus this week are further evidence that the crisis is not over and the situation remains very worrying,” he told lawmakers in his annual statement on the coalition government’s tax and spending plans.

“Another bout of economic storms in the eurozone would hit Britain’s economic fortunes hard. Forty percent of all we export... (is) to the eurozone.”

He added: “We are still very exposed to what happens on the continent.”

British economic growth guidance for 2014 was cut to 1.8 per cent from the previous estimate of 2.0 per cent that was given in December.

The economy was then expected to grow by 2.3 per cent in 2015, 2.7 per cent in 2016 and 2.8 per cent in 2017. These estimates were unchanged from previous figures.

Osborne added that Britain was on course to avoid sinking into a so-called triple-dip recession, despite contracting by 0.3 per cent in the final three months of 2012.

“Despite the recession in the eurozone, the OBR’s central forecast today is that we avoid a second quarter of negative growth here in the UK,” said Osborne.

The technical definition of a recession is two successive quarters of contraction.

COMMENT NOW