Drop in UK growth forecast limits chancellors budget wriggle room

The governments economic forecaster has cut its prediction for UK growth this year, limiting the Treasurys spending firepower in the forthcoming budget, according to a report.

In a move that will set the baseline for Treasurys calculations before the budget in March, the Office for Budget Responsibility (OBR) is understood to have provided a preliminary outlook that shows a weaker rebound this year from a period of high inflation and falling living standards.

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According to a report in the Times, the OBR has told the chancellor he will have 9bn less income after a fall in tax receipts compared with a forecast made in November.

OBR staff provide Jeremy Hunt with two independent assessments of the economy each year and how this will affect the governments finances based on the Treasurys spending plans. In a longstanding arrangement, the OBR gives an initial view to Treasury officials for them to begin the process of drafting budget proposals.