MNI BRIEF: UK OBR Slashes UK Growth Forecasts

The Office for Budget Responsibility has slashed its growth forecasts for 2022 to 3.8% from 6.0% and it foresees growth of 1.8% in 2023, down from 2.1% previously, as the Russian invasion of Ukraine puts "unusually high uncertainty around the outlook".

Chancellor of the Exchequer Rishi Sunak said that despite the lower growth the public finances were on track to meet his fiscal rules, including balancing the current budget in three years' time. He noted that borrowing as a percentage of GDP would be 5.4% this year, 3.9% next and 1.1% of GDP at the end of the forecast period. Sunak stressed, however, that the OBR has not been able in its updated forecasts to fully take into account the impact of the Ukraine war, entailing that the hit to growth and borrowing is likely to be larger still. The OBR will produced its next forecasts in the Autumn, and these Spring ones should be seen as interim projections.

The cost of servicing the UK's public debt is set to soar to record levels in the coming fiscal year, with the OBR saying interest payments will rise to GBP 83.5 billion -- four times higher than last year.