The OBR expects modest growth of 0.8% in 2012 but then picking up to 2% in 2013 and 3% by 2015/16, but risks are weighted to the downside as regards the Eurozone and oil prices. We expect the Chancellor to narrowly meet his fiscal targets but with little margin for error. A broadly neutral Budget was therefore prudent but this also implies little net boost to economic growth in the short run. Lower corporate tax rates should provide a modest boost to growth in the longer term, but there is still more to do before this Chancellor can win his spurs as a strategic tax reformer.
