The latest forecast by the UK’s tax and spending watchdog shows the Government’s plan to tackle the deficit is working, Chancellor George Osborne has said.
Mr Osborne said the Office for Budget Responsibility’s assessment was that there “will be no double-dip recession”, with “considerably higher” growth this year than predicted in June.
In a Commons statement, he announced that from April 2013 there will be a new lower 10% rate of corporation tax on profits from newly commercialised patents to encourage hi-tech business.
He told MPs the move had prompted a £500 million investment from pharmaceuticals giant GlaxoSmithKline which would create an estimated 1,000 new jobs.
The Chancellor also announced the publication of a “significant programme of corporate tax reforms” for consultation aimed at attracting international investment and business.
The OBR – formed in May to make an independent assessment of public finances and the economy – slashed its projections for public sector job cuts over the next four years from 490,000 to 330,000.
The watchdog’s forecast, which will provide the fiscal framework for the Government’s next budget in March, raised estimates for GDP growth in 2010 from 1.2% to 1.8%, but lowered growth in 2011 and 2012 from 2.3% to 2.1% and from 2.8% to 2.6% respectively.
Mr Osborne told MPs: “After the deepest recession since the war, the greatest budget deficit in our peacetime history and the biggest banking crisis of our lifetimes, recovery was always going to be more challenging than after previous recessions.
“But the message from the Office for Budget Responsibility is that Britain’s economic recovery is on track. The economy is growing, more jobs are being created and the deficit is falling.
“Their central forecast is for sustainable growth of over 2% for each of the next five years and employment rising in each and every year.”