Economy expected to expand during 2011-12

The economy is expected to grow by anywhere between 1.3% and 3.1%, according to the Treasury’s summary of around 40 forecasts from independent and City forecasters; the median (midpoint) figure for the forecasts in 1.7%.

An improvement is expected in 2012 with the range of forecasts running from 1.5% to 3.0% with a median figure of 2.1% growth.

The coalition government’s Office for Budget Responsibility (OBR) has forecast 2.1% growth this year and 2.6% in 2012, but these figures may be revised in the Budget on 23 March.

The forecasts for inflation, as measured by the RPI, range from a 2.9% rise up to a rise of 5.8% with a median figure of 4.4% in the fourth quarter 2011. The median rise for the fourth quarter 2012 is 3.2%.

The OBR forecast is for 3.4% inflation at the end of this year, moving down to 3.1% at the end of 2012.

Earnings forecasts lag behind inflation with range running from growth of 1.0% up to 4.2% with an average (median) of 2.7% for 2011. The median forecast for next year is for 3.0% growth.

www.hm-treasury.gov.uk/d/201103forecomp.pdf