The UK government has sent its growth forecast for 2017 sharply higher, raising it to 2.0 percent from the 1.4 percent rate predicted as recently as November.
Delivering his first Spring Budget announcement on Wednesday, Chancellor Philip Hammond said that while the government expected the overall level of gross domestic product (GDP) for the U.K. between now and 2021 to reach broadly the same level as that forecast during last November's Autumn Statement, growth would likely take a different route than what was previously expected.
"Today's OBR (Office for Budget Responsibility) report confirms the continued resilience of the British economy," declared the Chancellor, adding "I report today on an economy that has continued to confound the commentators with robust growth."
However, this year's anticipated growth rate of 2.0 percent is seen as a high point, not to be achieved again until 2021, with growth expected to dip as low as 1.6 percent next year. From there, the rate is seen edging gradually back up, with forecasts of 1.7 percent for 2019 and 1.9 percent for 2020.
Indeed, the forecast for the outer years is lower than predicted last November given the government's estimation that the negative effect from the U.K.'s exit from the European Union (EU) will not hit the domestic economy immediately. Indeed, even the higher 2.0 percent estimate for this year, still falls short of the 2.2 percent forecast held by the government prior to the Brexit vote last June.
Turning to inflation, the Chancellor set out a forecast trajectory of 2.4 percent this year edging down to 2.3 percent next year and 2.0 percent in 2019.
Hammond also painted a bright picture for employment, with an estimate for an additional 750 thousand people to be in work by the end of the forecast period in 2021.
Amid other notable points, the Chancellor said that corporation tax is set to drop from 20 percent to 19 percent from this April and then again to reach 17 percent by 2020. As recently as 2010, the level was 28 percent.
As fears grow that companies will seek to relocate outside of the U.K. once it leaves the trading bloc, the government has been keen to emphasize its focus on demonstrating the ongoing attractiveness of the country for business.
"A strong economy needs a fair, stable and competitive tax system, creating the growth that will underpin our future prosperity," outlined the Chancellor.
"My ambition is for the UK to be the best place in the world to start and grow a business."
Speaking to CNBC after Hammond's address to the House of Commons, Communities and Local Government Secretary Sajid Javid MP struck a defiant tone, asserting that the Chancellor's decisions were "what people want to see."
Javid explained that today's Budget "show(ed) the strength of the British economy, investing in that economy as we work on exiting the European Union." He said that Hammond was giving people "a lot of the solutions" and also wanted to bring "more fairness to the tax system, so he can invest in skills, in technology… in innovation."
When pushed on the U.K.'s forecast of two percent economic growth this year, Javid's overarching argument was that "the OBR (Office for Budget Responsibility) still believes that Britain is going to grow at a faster rate than any of the G7 economies this year, and that's a vote of confidence."