Pre-Budget Report 2003 Summary Leaflet | Maintaining a stable economy

			Pre-Budget Report 2003 Summary The strength to take the long-term decisions for Britain: Seizing the opportunities of the global recovery


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Following a period of global uncertainty, prospects for the world economy have improved since the start of 2003. The Government's economic reforms have helped the UK to maintain economic stability and steady growth through a challenging period for the global economy. The UK is now well placed to benefit from the opportunities that the global economic recovery will bring. The Pre-Budget Report shows that:

the economy is forecast to grow by 2.1% this year as the world economy recovers. The economy is expected to accelerate next year, growing by 3 to 3½% in both 2004 and 2005;

inflation is set to remain low and stable. In 1997, the Government gave the Bank of England responsibility for setting interest rates to meet an inflation target of 2.5% on the RPIX measure of inflation. In the Pre-Budget Report, the Government announces that the Bank of England will move to a new inflation target based on a different measure of inflation the Consumer Prices Index (CPI). The new target will be 2%. The CPI is a better measure than RPIX for the purposes of targeting inflation. Annual changes to pensions and benefits will not be affected by this change; and

the public finances remain sound and the Government is on track to meet its fiscal rules. Borrowing will be £37 billion this year and is then expected to decline, and debt is lower than in any other G7 country.