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Government set to borrow £11bn less
Pressure on the public finances will be less severe than previously thought, according to the independent tax and spending watchdog, as the UK narrowly dodges another recession this year.
The Government will borrow £11 billion less over the next five years than forecast in November, the Office for Budget Responsibility (OBR) said, while economic growth estimates remain broadly unchanged.
The OBR expects the Government to borrow £126 billion this year, rather than £127 billion, while it maintained its 2012/13 forecast at £120 billion and lowered each of its predictions for 2013/14 to 2016/17.
The lower borrowing bill came as the OBR lifted its estimate for gross domestic product (GDP) growth this year to 0.8%, from 0.7% in November, and cut its prediction in 2013 from 2.1% to 2%. The forecasts for 2014 to 2016 were unchanged.
Howard Archer, chief UK and European economist at IHS Global Insight, said the lower borrowing and unchanged growth forecasts were a "rare luxury" for the Chancellor, but warned 0.8% growth this year was "hardly a matter for celebration".
The Chancellor added that he is on target to eliminate the structural deficit - the share of the budget deficit that would remain after the economy recovers - by 2016/17.
The Chancellor is under pressure to stick to his tough austerity measures after agencies Fitch and Moody's both put the UK's AAA credit rating on negative outlook.
Vicky Redwood, chief UK economist at Capital Economics, said that by delivering a fiscally neutral budget, Mr Osborne can leave his deficit-busting plans unchanged. However, she said the forecasts still look "optimistic" and added: "The Government will soon start finding it rather harder to bring down borrowing."
The boost to the 2012 growth forecast comes after a slightly improved start to the year, which has seen upbeat surveys from the manufacturing and services sectors. And the lower estimate for borrowing in the year to March 2012 comes despite a larger-than-expected £15.2 billion jump in February's net borrowing excluding financial interventions, such as bank bailouts.
Total borrowing for the year to date is £110 billion, the Office for National Statistics said, and, with a month of the financial year to go, is £16 billion away from the new full-year target of £126 billion. Last year, public borrowing in March was £17.95 billion.