The latest update from the Office for Budget Responsibility (OBR) paints a rosier picture of British economic prospects.
In their quarterly report, the independent OBR raised their prediction for UK economic growth in 2010 from 1.2% to 1.8%.
They also now believe that 330,000 public sector workers will lose their jobs over the next four years. This is better than the 440,000 previously forecast in the June OBR report.
Looking ahead to 2011, the OBR is forecasting economic growth of 2.1%, down slightly from their previous prediction of 2.3%. They are forecasting growth of 2.6% in 2012, down from a forecast of 2.8% in June.
Also within the report is a prediction that unemployment will peak at 8% next year, before falling back to just over 6% by 2015.
Whilst these figures represent an improvement compared to the OBR report in June, they are still underwhelming when compared to previous economic recoveries following a recession.
The publication of these latest figures gave Chancellor George Osborne the opportunity to declare that UK economic recovery is “on track” despite “challenging” global conditions, during his autumn statement to MPs.
His statement in the House of Commons did little to reassure financial markets which remain nervous against a backdrop of concerns about the Irish and European sovereign debt crisis.
The FTSE 100 index of leading UK company shares has been in decline for most of the day, ending down 117.75 points or -2.08% at 5,550.95 points. This is the first time the index has finished below 5,600 since 1st October, with commodity stocks leading the fallers.
Whilst British economy recovery appears to be broadly on the right track, global pressures will continue to place pressure on the financial markets as we end the year and head into 2011.
Photo credit: Flickr/altogetherfool
