The Bank of England left its key policy rates unchanged on Thursday, while Chancellor of Exchequer George Osborne said in his autumn statement that the economy is better placed than they had expected early this year.
In his 2013 Autumn Statement, Osborne said Britain's economic plan is working and the hard work of the British people is paying off. The economic growth forecast for 2013 was more than doubled to 1.4 percent from 0.6 percent, he told lawmakers.
According to estimates by the Office for Budget Responsibility, the economy will grow 2.4 percent next year, up from the 1.8 percent projected in March.
Gross domestic product will grow 2.2 percent in 2015, 2.6 percent in 2016 and 2.7 percent each in 2017 and 2018. The chancellor said there was no double-dip recession in the U.K.
Osborne claimed that this was the largest improvement to current year economic forecasts at any Budget or Autumn Statement for fourteen years.
From 2012 to 2018, the OBR has revised up cumulative real GDP growth by 1.4 percentage points.
The nine-member monetary policy committee of the BoE concluded the two-day rate setting meeting today by retaining the key rate at a record low 0.50 percent and the size of monetary stimulus at GBP 375 billion.
The minutes of the meeting, to be released on December 18 will reveal the voting pattern.
The Treasury and the BoE announced last week their decision to end incentives to banks for lending to households through the Funding for Lending Scheme in order to quell concerns over a sharp upturn in the housing market.
BoE Chief Mark Carney said last month the unemployment rate is likely to slip down to the 7 percent threshold more rapidly than expected in the light of a strong economic recovery. But he affirmed that the fall in jobless rate to threshold will not trigger an automatic rate revision.
In August, the BoE pledged not to hike its key rate from the current 0.50 percent at least until the unemployment rate falls to 7 percent.
Osborne said in his statement that the jobless rate is likely to fall to 7 percent in 2015, slipping further to 5.6 percent by 2018. Employment is expected to reach 31.2 million by 2018.
The Office for Budget Responsibility now expects the total number of jobs to rise by 400,000 this year.
In the half yearly Economic and Fiscal Outlook, the treasury estimates the underlying deficit to fall to 6.8 percent of the GDP in 2013, instead of the 7.5 percent forecast in March.
The deficit was 11 percent of GDP when this government came to office, he said.
It will then fall to 5.6 percent next year, then to 4.4 percent and to 2.7 percent and by 2017-18, it is expected to be at 1.2 percent of the GDP. And by 2018-19 on this measure, the OBR do not expect a deficit at all, Osborne told lawmakers.
Updating the budget forecast, Osborne said the government remains on course to meet the fiscal mandate one year early. He forecast the current balance to show a surplus of 1.6 percent of GDP in 2018-19.
Public sector net borrowing is forecast to be in surplus of the magnitude of 0.1 percent of GDP in 2018-19.
This year the government will borrow GBP 111 billion, which is GBP 9 billion less than was feared in March. "That falls next year to GBP 96 billion, then down to GBP 79 billion in 2015-16, GBP 51 billion the year after, and GBP 23 billion the year after that," he added.
He also announced various measures in the mini-budget to help struggling businesses.
The government will cap business rates to support all enterprises. The rate rise will be limited to 2 percent from next April, instead of being linked to inflation.
In order to ease the burden on small businesses, Osborne extended the business rate relief scheme for another whole year, which was set to expire next April.
He also doubled the export finance capacity available to support British businesses to GBP 50 billion.
He canceled next year's fuel duty rise, while introducing capital gains tax for non-residential property investors. Instead of petrol taxes going up by 2 pence a litre, they will stay frozen, he said.
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June 19, 2026 16:46 ET Major central banks continued to dominate the economic news flow this week too, led by the Federal Reserve, as they announced their latest policy decisions. The Federal Reserve policy session was in focus as it was the first to be led by the new chief Kevin Warsh. In Europe, central banks of the U.K. and Switzerland announced their rate decisions. In Asia, the Bank of Japan drew attention for its policy moves, while data out of China threw some light on the state of the economy.