From the TUC

Whither the investment led recovery?

21 Mar 2012, by Guest in Economics

The OBR made very few changes to its headline growth estimates in today’s forecasts – up 0.1% in 2012, but down 0.1% in 2013.

However it made far larger changes to the composition of that growth. Throughout 2009, 2010 and 2011 George Osborne has been keen to talk of an ‘investment and export led recovery’. He mentioned exports quite a few times in his speech today – but there was relatively little talk of ‘business investment’. Looking at the OBR’s new forecasts the reason for this becomes very clear.

They have revised down their forecasts for business investment growth in 2012 by a huge 6.9%, revised down 2013 by 2.5%, 2014 by 0.5%, 2015 by 2.4% and 2016 by 2.3%.

And all this is despite further cuts in the headline rate of corporation tax. As the TUC have long argued cuts in corporation tax, especially if funded through cuts to capital allowances, will not improve business investment.  It seems the OBR is now starting to agree.

3 Responses to Whither the investment led recovery?

  1. The consumer-led recovery? | ToUChstone blog: A public policy blog from the TUC
    Mar 21st 2012, 2:56 pm

    […] I’ve already noted this afternoon whilst the OBR has made few changes to its headline growth forecasts it has chnaged the expected […]

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    Mar 22nd 2012, 8:59 am

    […] is relying on consumer-led growth, but will it materialise? by Duncan Weldon     I noted yesterday afternoon that whilst the Office of Budget Responsibility had made few changes to its headline growth […]

  3. Business Investment & Corporation Taxes | ToUChstone blog: A public policy blog from the TUC
    Mar 22nd 2012, 2:24 pm

    […] OBR forecasts show a collapse in business investment growth and a recovery that is now more reliant on consumption. This came following a Budget in the […]