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Eurozone crisis effect: UK halves 2013 growth forecast to 0.6%

Great Britain on Wednesday halved its economic growth forecast for 2013, blaming the ongoing impact of the eurozone debt crisis, Finance Minister George Osborne revealed in his annual budget.

The country’s Gross domestic product (GDP) was expected to grow by just 0.6 per cent this year, half the previous forecast of 1.2 per cent, according to estimates issued by the Office for Budget Responsibility (OBR).

‘The problems in Cyprus this week are further evidence that the crisis is not over and the situation remains very worrying,’ he told members of parliament in his annual statement on the coalition David Cameron government’s tax and spending plans.

‘Another bout of economic storms in the eurozone would hit Britain’s economic fortunes hard. Forty percent of all we export... (is) to the eurozone.... We are still very exposed to what happens on the continent,’ the finance minister added.

British economic growth guidance for 2014 was cut to 1.8 per cent from the previous estimate of 2.0 per cent that was given in December.

The economy was then expected to grow by 2.3 per cent in 2015, 2.7 per cent in 2016 and 2.8 per cent in 2017. These estimates were unchanged from previous figures.  Osborne added that Britain was on course to avoid sinking into a so-called triple-dip recession, despite contracting by 0.3 per cent in the final three months of 2012.

‘Despite the recession in the eurozone, the Office for Budget Responsibility’s central forecast today is that we avoid a second quarter of negative growth here in the United Kingdom,’ said Osborne. The technical definition of a recession, as officially coined by  economists, is two successive quarters of contraction.
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