47881_Budget_2015_Web_Accessible

1.31 The OBR has revised up its forecasts for UK growth in 2015 from 2.4% to 2.5% and in2016 from 2.2% to 2.3%. The OBR forecasts growth of 2.3% in 2017, rising to 2.4% in 2019.The OBR forecasts employment to be 31.1 million in 2015, rising to 31.9 million by 2019. TheOBR has revised down its forecast for the unemployment rate in 2015 from 5.4% to 5.3%.The OBR forecasts unemployment of 5.2% in 2016 and 5.3% for the remainder of the forecastperiod.1.32 The output gap represents the amount of spare capacity in the economy. Higher GDPgrowth in 2015 and 2016 means that spare capacity in the economy will be reduced morequickly than expected at the time of Autumn Statement 2014. The OBR therefore forecastsremaining spare capacity in the economy to be used up by late 2017, a year and a half earlierthan forecast at Autumn Statement 2014.1.33 The OBR forecasts business investment growth of 5.1% in 2015 and 7.5% in 2016. TheOBR expects private dwelling investment to grow by 3.5% in 2015, 5.4% in 2016 and 5.5% in2017. The OBR forecasts exports growth of 3.9% in 2015 and 4.0% in 2016 and growth of over4.0% over the remainder of the forecast.1.34 CPI inflation is forecast to be below target in 2015 and remain below target beforereturning to 2.0% in 2019.The government’s plan1.35 The government’s long-term economic plan builds a stronger, more competitive economy,a fairer society, and secures a better future for Britain by:••reducing the deficit to deal with the UK’s debt, safeguard the UK economy for the long termand keep mortgage rates low••cutting income taxes and freezing fuel duty to help hardworking people be more financiallysecure••creating more jobs by backing small business and enterprise with better infrastructure, lowerjob taxes and a long-term industrial strategy••capping welfare and controlling immigration so the economy delivers for people who wantto work hard and play by the rules••delivering the best schools, skills and apprenticeships for young people so the nextgeneration can succeed in the global race1.36 In order to safeguard the economy for the long term, the government is continuing totake decisive action through: monetary activism and credit easing, deficit reduction, reform ofthe financial sector, and a comprehensive package of structural reforms.Monetary policy1.37 Monetary policy has a critical role to play in supporting the economy as the governmentdelivers on its commitment for necessary fiscal consolidation. The government has ensuredthat monetary policy can continue to play that role fully by updating the UK’s monetary policyframework and remit for the Monetary Policy Committee (MPC) at Budget 2013.1.38 The MPC has full operational independence to set policy to meet the inflation target.Budget 2015 reaffirms the inflation target of 2% for the 12-month increase in theCPI, which applies at all times. This target is symmetric meaning deviations below the targetare treated the same way as deviations above the target. Symmetric targets help to ensure thatinflation expectations remain anchored and that monetary policy can play its role fully. Thegovernment also confirms the Asset Purchase Facility (APF) will remain in place forthe financial year 2015-16.Budget 201517