PowerSwitch

Maintaining macroeconomic stability

The Government's long term economic goal is to maintain macroeconomic stability, ensuring the fiscal rules are met at all times and that inflation remains low.

The UK economy is currently experiencing its longest unbroken expansion on record, with GDP now having grown for 58 consecutive quarters. Over the past ten years, the Government's macroeconomic framework has delivered more stability in terms of GDP growth and inflation rates than in any decade since the war.

Overall economic developments are as forecast at the Pre-Budget Report. The UK economy grew by 23/4 per cent in 2006, as forecast in the Pre-Budget Report. The rebalancing of domestic demand gathered pace during 2006, with business investment ending the year growing at the fastest rate for eight years. The Budget 2007 economic forecast is little changed from that of the Pre-Budget Report. GDP is forecast to grow by 23/4 to 31/4 per cent in 2007, and then at trend rates of 2½ to 3 per cent. CPI inflation is expected to return to target in the second half of 2007.

the current budget shows an average surplus as a percentage of GDP over the current economic cycle, even using cautious assumptions, ensuring the Government is meeting the golden rule. Beyond the end of the current cycle, the current budget moves clearly into surplus including, by the end of the projection period, the cyclically-adjusted current budget in the cautious case; and


public sector net debt is projected to remain low and stable over the forecast period, stabilising at a level below 39 per cent, below the 40 per cent ceiling set in the sustainable investment rule.