Slow Growth, Faster Borrowing
New growth forecasts have found that a slower pace could force the UK government to borrow more than previously thought.
This new information, compiled by the Treasury, has revealed a economic growth this year of 1.5 per cent, showing a lower figure than earlier estimates of 1.6 per cent. It was further estimated that next year, growth will slow even further.
The Chancellor of Exchequer, Richard Hammond, is to release the year’s Budget on Wednesday. Hammond has confirmed funds for areas such as house building, but may struggle to boost construction levels given the shortage of Government funds.
Nonetheless, unemployment remains at a record low and the new figures suggest this will keep falling at the end of year, and stay low at 4.2 per cent next year.
Despite initial concerns at the start of the year, and a $58.3 billion deficit estimate in March, borrowing has fallen more quickly than expected. However, this unexpectedly good progress will not continue next year.
Economists expect the deficit to fall to £42.9bn, a higher figure, and far gloomier outlook, than previous forecasts. .
Moody’s, the credit ratings agency blamed Brexit for this weakened outlook.
“We expect the uncertainty of Brexit negotiations to continue to weigh on UK economic performance,” Moody’s said.
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