UK economic forecasts should be little changed

In the July Economic and fiscal outlook, the Office for Budget Responsibility (OBR) forecast GDP growth of 2.4% in 2015, followed by 2.3% in 2016 then 2.4% each year from 2017-2020. Since then, the ONS has released the benchmark revisions to the national accounts which should prompt some revisions to the details of the OBR macro-economic forecasts but only expect small changes to the key magnitudes. 

The most important magnitude in the forecast is the growth rate of nominal GDP. The OBR based its forecasts on a 2014 nominal GDP growth out-turn of 4.6% yoy; that has since be revised modestly to 4.7%. The OBR's forecast of inflation for 2015 of 0.1% should turn out to be very accurate so requires no revision; the 2016 forecast of 1.1% still looks reasonable. 

"We question the path beyond that which only reaches 2.0% by 2020 but we doubt that the OBR will see any reason to modify the assumptions underpinning that forecast at this stage", notes societe Generale.

The update of the OBR's set of macro forecasts is only likely to lead to minor changes which should not by themselves warrant any change to the OBR's public finance projections. However, there may well be changes caused by other factors.