The UK Economy

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* GDP is expected to grow by 2 per cent this year and around 2 1/2 per cent per annum for several years after that.

* Falling world interest rates mean that UK interest rates can fall without inflation rising far above its target. Our forecast assumes a reduction to 4.5% this year with further reductions next year.

* The revision to the timing of the economic cycle does nothing to reduce the need for tax increases. The fiscal gap to be closed remains at up to I per cent of GDP.

* Even in the current cycle, with the Golden Rule correctly measured our expectation is that the rule will only just be met.

* A comparison of the National Institute's …