Spring Statement 2018: Further details on plans to tackle United Kingdom housing crisis

Chewing gum on show

After a slightly better performance in 2017 than it had expected when it last reported in November, the OBR now thinks growth will be 1.5% in 2018, up from the 1.4% previously predicted.

He confirmed that in 2018-2019 the Government's day-to-day spending will be in surplus, while the UK's debt mountain will peak at 85.6% of GDP this year and gradually fall to 77.9% by 2022-23.

The predictions, made by Office for Budget Responsibility, would put the United Kingdom among the slowest among major economies as global growth picks ups, and are also drastically more pessimistic than those from before the Brexit referendum.

Separately on Tuesday, the Organisation for Economic Cooperation and Development (OECD) forecast that Britain would miss out on buoyant global economic growth over the next two years.

Calling on the nation to do even better than predicted, the Chancellor said: "That's the OBR's forecast - but forecasts are made to be broken".

"A lot will depend on what happens with sterling and oil prices, and with retailers suffering so much the temptation to put up prices to mitigate lower volumes will be strong, and that's before you consider the impact of the incoming living wage".

Mr Hammond said there was still work to be done, but the Government would always take a balanced approach to reducing the debt, investing in public services and keeping taxes low, said the PM's spokesman. "These forecasts are likely to be no less fallible than earlier ones and, despite an improving trend in public borrowing, the burden of debt in the United Kingdom is still at its highest in over 50 years".

However, he added: "We should not get carried away".

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After Theresa May agreed the outline of Britain's withdrawal deal from the European Union in December, the OBR said it now had "sufficient clarity" to estimate the cost of the UK's so-called "divorce bill" at £37.1bn, within the Prime Minister's predicted range of £35bn to £39bn.

Most of this - about £28bn - is due over the next five years.

He told MPs: "If, in the autumn, the public finances continue to reflect the improvements that today's report hints at, then ..." However, pension promises mean the United Kingdom will still be paying around £2.5bn all the way to 2064.

However, it warned that this so-called dividend should not be viewed in isolation. "The big challenges facing Britain of weak pay and productivity growth remain largely unchanged".

However, Paul Mumford, fund manager at Cavendish Asset Management, said while he was loathe to question a forecast from the "ever-reliable" OBR, he described its confidence on inflation as "quite curious".

He told the BBC: "The growth forecasts are about 1.5% growth each year for the next few years which is better than forecasting a recession, but it's an terrible lot worse than you might reasonably expect".

Instead, he said the economy had grown in every year of the Conservative-led governments, with manufacturing enjoying its longest unbroken run of growth for 50 years, three million additional jobs and higher levels of employment in every part of the UK.

"But looking further ahead the OBR offers very little good news".

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