UK growth forecast revised down; economy to shrink in 2012

The UK's Office of Budget Responsibility (OBR) has slashed the country's 2012 growth forecast from 0.8 per cent predicted in March to a 0.1-per cent contraction.

The country's independent budget watchdog has revised up its forecasts for public sector borrowing over the next five years as a weaker outlook for the economy reduces tax revenues.

Economic growth has been slower than expected reflecting weaker net exports and the government is not likely to achieve its target of reducing net debt in 2015-16. The government's austerity drive will now extend up to 2018.

In the 'Economic and Fiscal Outlook-December 2012' presented to the parliament yesterday, chancellor of the exchequer George Osborne said it would take four years instead of three years anticipated earlier to reduce the country's deficit.

 ''While our deficit is forecast to go on falling, instead of taking three years to get our debt falling, it's going to take four,'' Osborne said.

''It's taking time, but the British economy is healing,'' he said.