Budget 2017: Chancellor labels productivity “disappointing” as economic forecasts are downgraded

PUBLISHED: 18:57 22 November 2017 | UPDATED: 20:54 22 November 2017

Chancellor Philip Hammond delivers his Budget in the House of Commons. Picture: PA Wire.

Chancellor Philip Hammond delivers his Budget in the House of Commons. Picture: PA Wire.

A downgrade of economic predictions and “disappointing” productivity performance cast an early pall over the Budget.

Philip Hammond reported that the Office for Budget Responsibility (OBR) had revised down the outlook for productivity growth, business investment and GDP growth over the next five years.

It now expects to see GDP grow 1.5% in 2017, 1.4% in 2018, 1.3% in both 2019 and 2020, before picking back up to 1.5%, and finally 1.6% in 2022.

Inflation had peaked at 3% and was expected to fall back towards its 2% target over the next year, it added.

Mr Hammond said that, despite the OBR assuming at the last 16 fiscal events that productivity growth would return to its pre-crisis trend of around 2% a year, it had remained “stubbornly flat”.

However, the OBR did have some good news for the chancellor, as it predicted that national debt would peak this year before gradually falling as a share of GDP.

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