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Uk To End The Year On A High Note

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UK economy to 'end year on a high note'

By Dan Atkinson

28 November 2010, 11:13am

George Osborne could be in a position to announce that almost a fifth of public sector workers faced with losing their jobs may now be spared when he delivers his autumn statement tomorrow.

According to the ITEM forecasting club, the reason for the potential reprieve is that welfare savings are bigger than expected.

ITEM says that the Chancellor will have been advised by the independent Office for Budget Responsibility that fewer state sector posts must now be cut to reduce the deficit.

In his statement, Osborne is likely to add to the pre-Christmas cheer by saying also that the OBR has lifted its growth estimate for this year from 1.2% in the June Budget to as much as 1.8%.

'Britain will end the year on a high note,' Item will claim tomorrow. But the picture is expected to darken in the years ahead as spending cuts take their toll and welfare cuts reduce the amount spent by the poorest families.

And Scotland is facing a 'joyless, jobless recovery', says Item, which uses the Treasury's computer model of the economy.

Weakness in the labour market and the impact of public-spending cuts will mean a 'slow grind' on the road to recovery north of the Border.

Osborne will address MPs tomorrow afternoon, disclosing the latest official forecast for growth and fiscal projections, which have been dealt with by the OBR since the Election.

Professor Peter Spencer of York University, adviser to Item, said: 'The OBR's estimate of 490,000 public-sector job losses could be reduced to 400,000 because the Government has decided to find greater savings from welfare reform. That means more money for departments' budgets, but additional welfare cuts will mean a weaker contribution from consumer spending.'

This year seems to be ending in an upbeat mood, underlined by good figures for retail sales last week.

But there are likely to be difficult times ahead. While Spencer said the OBR was unlikely to have changed its growth forecasts for future years, many believe them to be too optimistic.

Looking beyond the short-term cheer, Item will warn: 'Further out, there are all sorts of uncertainties surrounding welfare programmes and the achievability of the departmental cuts, while there is always potential for unforeseen outlays, such as the contribution to the support package for Ireland.'

• The Federation of Small Businesses is calling on the Government to boost the economy by imposing a standstill on business regulation, cutting VAT to five% in the construction sector and helping firms to become more environmentally friendly.

It has written to Osborne setting out steps it believes must be taken if small businesses are to grow.

I'm still flying the flag... :rolleyes:

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According to the ITEM forecasting club, the reason for the potential reprieve is that welfare savings are bigger than expected.

What? So the deficit has gone and we've paid down our foreign debts? No need to tighten our belts any more? Wow. And that even without the housing benefit cuts.

Struggling to do the math over here :huh:

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Wow! So it's not such "a "wretched economy" and such "a mess they left the economy in" when they were talking about things like increasing student fees last week.

When it's public sector jobs it's "things are better than expected". That is so a wow!

It's so true that a week is a long time in politics.

No wonder they can afford to splash out money to help bail-out Ireland.

Edited by billybong
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]the independent Office for Budget Responsibility

That'll not be an office, it'll not be independent, it'll not budget, it'll not be responsible and it'll not be for anything apart from giving it's directors high remuneration but I guess it'll still be well worthwhile taking its advice.

Edited by billybong
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