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Maintaining a stable economy

The world economy is expected to remain strong in 2007. Economic growth in the UK has been driven by further increases in UK business investment, as well as a recovery in the growth of the major European and Asian economies to which the UK exports. The Government’s economic reforms have continued to help the UK maintain macroeconomic stability throughout this period. The Budget shows that:

• the economy is expected to grow by 2¾ to 3¼ per cent in 2007, and by 2½ to 3 percent in 2008 and 2009, as forecast in the Pre-Budget Report;

• inflation is set to remain low and stable; and

• the public finances remain sound and the Government is on track to meet its fiscal rules, with borrowing forecast to be £35 billion in 2006-07 and debt lower than in the US, Japan, Italy, France and Germany.