Newspaper article The Evening Standard (London, England)

Gordon Blows the Trumpet on Growth; BUDGET REPORT

Newspaper article The Evening Standard (London, England)

Gordon Blows the Trumpet on Growth; BUDGET REPORT

Article excerpt


GORDON BROWN'S 10th and final Pre-Budget Report today upgraded his forecasts both for this year's economic growth and the overall trend rate for the economy.

Thanks to the tide of immigration from central and Eastern Europe, and the increase in the numbers of people working later into their 60s, the economy has repeatedly beaten growth forecasts without pushing inflation far beyond the 2% target.

Today, the Chancellor increased his estimate of the sustainable trend growth rate for the economy. Having previously downgraded the trend rate from 2.75% to 2.5%, he has now upped it again to 2.75%. Peter Spencer, chief economic adviser to the Ernst & Young ITEM Club of respected economists, said: "Taken over four years, that means 1% more growth in the economy which in turn means upwards of [pounds sterling]5 billion more public spending."

As expected, Brown increased his predictions for this calendar year's economic growth from the 2%-2.5% prediction in the March Budget to 2.75%, but kept next year's prediction at 2.75%-3.25%.

"The Treasury forecast is that growth - sustained under this Government for a record 38 quarters, will continue into its 39th and 40th quarter and beyond," he said.

Far less glowing were Brown's statistics on the public finances. By sticking to the Conservative government's tough spending plans in the late 1990s, and selling 3G mobile phone licences for [pounds sterling]22.5 billion, he managed to get the budget into surplus. Big spending since, on the NHS and schools, has run up a vast deficit.

In March, he predicted he would improve the country's [pounds sterling]36 billion deficit by [pounds sterling]2.8 billion in the year to 1 April 2007. However, he was today forced to admit, as widely expected, that he would not be able to achieve that. …

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