OBR forecasts paint a more pessimistic picture of the UK economy, says BCC

24th November 2016

Commenting on the latest forecasts published by the Office for Budget Responsibility, published today in conjunction with the Chancellor's Autumn Statement, Suren Thiru, Head of Economics at the BCC, said: -Unsurprisingly, the OBR's revised forecasts paint a more pessimistic picture of the UK economy.

-Despite this, in our view the OBR is slightly too optimistic about the UK's near-term prospects. We think that the outlook for business investment is likely to be materially weaker than the OBR is currently predicting, with higher inflation and continued uncertainty over Brexit likely to stifle business growth intentions over the next year. However, measures to boost the UK's creaking infrastructure and weak productivity announced in the Autumn Statement will help to support business confidence during this period of economic uncertainty. -On the public finances, the OBR's latest forecasts confirm that the UK's already challenging fiscal position is set to weaken further over the medium term. While the slower pace and greater flexibility of the new fiscal framework is a welcome step, the government's ability to meet its new fiscal rules will ultimately be driven by whether it is able to reverse the persistent shortfall in tax revenues.