Chancellor, George Osborne will deliver his first full Budget of the Parliament on 16th March 2016 as the Government seeks to deliver a surplus by the end of its current Parliament in 2020.
The prospects of achieving the £10bn surplus target, set by the Chancellor, would appear to depend largely on predictions of inflation, wages, interest rates and migration levels from the Office for Budget Responsibility (OBR).
However, many analysts fear that these forecasts could be knocked off course in the coming months and years.
In last week’s Autumn Statement and Comprehensive Spending Review, the OBR was able to revise its forecasts favourably in order to release an extra £27bn for the Chancellor, which was used to scrap planned cuts to tax credits and ease the pain of spending cuts throughout Whitehall.
As part of Mr Osborne’s five-year Whitehall and local government budget, the OBR calculated that the extra jobs and tax incomes, combined with changes to the composition of the UK’s working-age population, would result in a potential rise of the UK’s economic output by 0.9 per cent.
As the government’s independent forecaster, the OBR will continue to provide a rolling five-year view of public spending based on the Treasury’s spending plans, which will accompany the Budget 2016 in March.
The news of the next Budget has been followed by news that the UK economy looks likely to pick up speed towards the end of the year, propelled by services companies.
According to Thursday’s Markit/CIPS UK services purchasing managers’ index (PMI), activity in the service sector – ranging from accountancy firms to hairdressers – grew at its fastest rate in four months in November.
The economy is forecast to expand 0.6 per cent in Q4 2015, picking up from 0.5 per cent growth in the previous quarter.
Image: HM Treasury