Projections For The UK Economy Reported From Greengates Builders Merchants Accrington, Lancashire
The new independent fiscal watchdog has downgraded the economic growth projections for the UK economy.
The Office for Budget Responsibility (OBR) has predicted that the economy will expand by only 2.6% in 2011, down from the 3% to 3.5% estimate that was given in Labour's last Budget.
The lower figure is likely to increase the drive of the coalition government to cut public spending, as lower growth means fewer tax revenues.
Yet the The Office for Budget Responsibility also says the deficit and debt will not be as bad as forecast.
It predicts that the UK's public deficit will fall, down to 10.5% of GDP in the 2010-11 financial year, from the 11.1% estimated by Labour.
For overall net government debt - the sum of all borrowing - The Office for Budget Responsibility estimates this will decline to 62.2% of GDP in 2010-11 from the previous estimate of 63.6%.
Former Labour Chancellor Alistair Darling said The Office for Budget Responsibility figures "show that borrowing will be less than I forecast, so the government doesn't have the excuse to raise VAT, which it is planning".
He added that if the government cuts public spending too aggressively it could send the UK into a double-dip recession.
However, The Office for Budget Responsibility says the structural deficit - the part of the deficit that is not automatically reduced by economic growth - will widen from Labour prediction of 7.3% of GDP in 2010-11 to 8%.
This is the most difficult part of the deficit to tackle, and Chancellor George Osborne said The Office for Budget Responsibility figures "couldn't be clearer".
"It's damning evidence that the mess the previous Government left behind is even bigger than we thought," added Mr Osborne.
Here at Greengates Builders Merchants Accrington, Lancashire we are hoping that the new government is going to make a big impact and pull us out of this horrendous recession that we are swimming in at the moment. However, we are intrigued to hear about the way the government plans to do this.