**MNI 5 THINGS: UK Econ Sees Borrowing Fall, Less Than Hoped

--UK 2017/18 Borrowing At stg45.2 Bln Vs Nov Fcast stg49.9 Bln

     **LONDON (MNI) - Following the Spring Statement we outline five themes we

think deserve particular attention.

     -2017/18 Borrowing Improvement Less Than Expected. 

     The Office of Budget Responsibility (OBR) forecast public sector net

borrowing to total stg45.2bn this fiscal year, a smaller improvement than the

stg43.0bn balance expected by markets. A balance of stg45.2bn would however be

stg0.6bn lower than last fiscal year and the lowest borrowing total in 10 years.

The Office of National Statistics (ONS) reported year-to-date borrowing of

stg37.7bn in January, so the OBR's forecasts mean that the final two months of

the fiscal year will see an extra stg7.5bn added to the cumulative balance.  

     -Wage Growth Forecast Up Near Term. 

     Projected wage growth in 2018 was revised up by 0.4pp to 2.7%, with the OBR

attributing this to the wage settlement data received so far this year. Long

term, wage growth was revised lower, only breaking past the 3.0%-mark in 2022, a

year later than they previously forecast.   

     -Productivity Rebound Expected to Unwind. 

     The rebound in UK productivity was the biggest data surprise since the OBR

published its November forecast, but the OBR expects this to unwind quickly, as

it did 2011. The OBR put the stronger productivity H2 2017 data down to a

decline in average hours worked which it said was the largest drop since

mid-2011. In 2011 the same pickup proved erratic and was subsequently reversed

and the OBR assumes that this will prove the same for the 2017 pickup.

Worryingly, the productivity path laid out in March sits below that made in

November. 

     -Net Trade Set to Deteriorate. 

     Export growth is expected to slow to around 3% in 2018 according to the OBR

as the effect borne from the depreciation in sterling starts to dissipate away,

flattening off altogether between 2020 and 2022 as growth in UK export markets

eases and Brexit weighs on the UK's export market share. Import growth,

meanwhile, is expected to slow to 1.5%, before slowing to zero in between

2020-22.     

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

[TOPICS: MABDS$,MAUDR$,MAUDS$,M$B$$$,M$E$$$,M$U$$$]