The Chancellor's margin for error remains very small compared to the uncertainties involved, says John Hawksworth.
From a macroeconomic perspective there were few major surprises in what was essentially a ‘steady as she goes’ Budget. The Office for Budget Responsibility (OBR) made only minimal changes to its growth forecasts – the big picture continues to be modest growth of 0.8% this year picking up to around trend at 2% in 2013. This seems reasonable as a main scenario although risks from the Eurozone and oil prices remain weighted to the downside in the short term as the Chancellor said.
In later years the OBR projects growth picking up to an above trend rate of 3% in both 2015 and 2016.
This is driven by an acceleration in real business investment growth...
.jpg?sfvrsn=335a554c_0 "300 x 250 (MPU)")