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NIESR: The Autumn Statement and the OBR’s forecasts
The Government's Autumn Statement makes for sober reading.
The Office for Budget Responsibility (OBR) has significantly revised down its assessment of the outlook for
the economy and public finances, moving into line with NIESR's recent forecasts.
The OBR assumes that the Euro Area crisis is resolved by ‘struggling through’ its current difficulties. Under this scenario NIESR expects the UK to experience a short recession, with growth resuming in the second half of 2012.
The Chancellor can do little to resolve the Euro Area crisis. It remains the NIESR view that in the short term fiscal policy is too tight, and a temporary loosening would improve prospects for output and employment with little or no negative effect on fiscal credibility.