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Pushing GDP growth back to previous levels would clear the deficit in five years, budget watchdog says

admin by admin
January 15, 2022
Reading Time:1min read
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Pushing GDP growth back to previous levels would clear the deficit in five years, budget watchdog says

Returning economic growth to its previous long-term trend would allow the Government to clear the deficit almost completely within five years, the UK’s budget watchdog has said.

Under currently forecast GDP growth of 1.6 per cent per year, the Treasury will still be borrowing £44bn annually by 2026/27. But Richard Hughes, chair of the Office for Budget Responsibility, said that increasing growth to 3 per cent would cut the deficit by £38.7bn because of higher tax receipts.

The figures were revealed in a letter to Labour’s shadow Chancellor Rachel Reeves, who claims Rishi Sunak is wrong to focus on balancing the books in the short term ahead of growing the economy.

She told i: “The UK economy suffered the worst economic crisis of any major economy, and these figures confirm that without urgent action the UK risks being stuck in a cycle of low growth and high taxes.

“We need a stronger economy to achieve prosperity in every part of the country, and so that the NHS and our other great public services have the funding they need in the years to come.

“Labour would create a more…

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