Budget 2011: economy

The OBR revised down its short-term economic growth forecasts and revised up its forecasts for public borrowing, but even these new forecasts may prove somewhat optimistic. Given the scale of the budget deficit, the Chancellor decided to make no material change in his previous plans for tax rises and spending cuts. But with no net injection of money into the economy, the new measures in the Budget seem unlikely to have more than a very modest impact on economic growth over the next few years. They do, however, indicate an intended direction of travel that could be positive for growth in the longer term.