Page last updated at 16:55 GMT, Monday, 29 November 2010

Osborne: OBR forecast means 'the plan is working'

Chancellor George Osborne has told MPs that the latest forecast by the Office for Budget Responsibility (OBR) provides evidence that the government's "plan is working".

The OBR predicts "sustainable growth of over 2% for each of the next five years and employment rising in each and every year", he said in a Commons statement on 29 November 2010.

Its projections for public sector job cuts over the next four years have been revised down from 490,000 to 330,000.

Mr Osborne said this was due to the government's decision "to cut welfare bills rather than public services".

Borrowing this year is expected to be £1bn less than forecast in June, and debt as a share of GDP is predicted to peak just below 70% in 2013-14 then fall to 67% by 2015-16.

Over the forecast period, Mr Osborne said £19bn would be saved in interest payments on the national debt.

He told MPs: "This is an uncertain world but the British recovery is on track. Employment is growing, one million more jobs are being created, the deficit is set to fall, the plan is working.

"So we will stick to the course. That is the only way to help confidence to flourish and growth to return."

He also announced that from April 2013 there will be a new lower 10% rate of corporation tax on profits from newly commercialised patents to encourage hi-tech business.

The chancellor told MPs the move had prompted a £500m investment from pharmaceuticals giant GlaxoSmithKline which would create an estimated 1,000 new jobs.

A "significant programme of corporate tax reforms" aimed at attracting international investment and business will be published for consultation, Mr Osborne added.

But shadow chancellor Alan Johnson characterised Mr Osborne's approach as a "reckless gamble" that relied too heavily on exports and could lead to a "jobless recovery".

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