Britain’s official economic forecaster told the government that it had overestimated the prospects for medium-term growth, and it tried to revise down its outlook, according to the report by the Times newspaper.
The newspaper wrote that the downgrade would eliminate the $9.2 billion in government headroom in public finances and also limit the scope for maneuvering of Finance Minister Jeremy Hunt on his drafted spring budget, expecting to be announced in March.
The Office for Budget Responsibility (OBR) predicted in November that the economy would contract by 14% this year before recovering to 1.3% in 2024, 2.6% in 2025, and 2.7% in 2026.
As reported by the Times, OBR expected to cut its forecast by between 0.2% and 0.5%.
Britain’s economy still has not recovered to its pre-pandemic size, as it is restrained by inflation over 10% and a tight labor market.
The Times reported, this year, OBR’s opinion on this year’s recession pointed to shorter and flatter than expected.