UK Economy Forecast Report: Winter 2015

A new forecast for the UK economy has been launched by the CBR. The authors of the report are Dr Graham Gudgin and Ken Coutts, of the Centre for Business Research, University of Cambridge; and Professor Neil Gibson and Jordan Buchanan, of the Economic Policy Centre, Ulster Business School, the Ulster University, Belfast. This forecast is generated by a newly developed model in the Keynesian tradition which provides an alternative to the model of the Office for Budget Responsibility (OBR). The main points in the forecast are: • GDP is forecast to grow at 2.2 per cent in 2016, slowing to only a little over one per cent by 2020, and hence well below the OBR's expectation for GDP growth at close to 2.4 per cent per annum. • The Government deficit is projected to stabilise at two per cent of GDP and hence the Government is projected to miss its target of balancing its budget by 2019/20. • Employment growth is expected to slow in 2017 before beginning to fall in 2018, accompanied by rising unemployment, up to 6.8 per cent of the labour force by 2020. • Net trade is expected to remain a drag on UK growth throughout the parliament with a balance of payments deficit remaining in the range four to five per cent of GDP until 2020. Consumer debt is projected to begin increasing rapidly, rising to 170 per cent of income by 2020, the highest ever recorded.