British small businesses and consumers could still be in for a rough time of things, according to the Office for Budget Responsibility (OBR).
The OBR has revealed that rising inflation levels are likely to severely jeopardise the recovery of the British economy.
Current OBR projections suggest that economic growth will rise to almost 3% over 2013, however, many city analysts believe that this could be rather optimistic, given the rate of growth at the moment.
Stephen Nickell, of the OBR’s Steering Committee, has stated that unless the level of inflation drops in 2012, forecasted growth will be seriously undermined.
Commenting on the price of oil, Mr Nickell, said:
“Embedded in our forecasts is the notion that oil prices won’t continue to rise. The biggest risk is that they continue rising, in which case inflation won’t fall back in 2012 as we expect and consumption would be weaker.”
The OBR believe that consumer confidence will be key to driving the economic recovery, however, with the current rate of petrol costs consumer confidence still appears some way off, at least in this humble blogger’s opinion!
On a more positive note, small business owners will be releaved to hear that the Budget, revealed last week, showed a significant reduction in the corporation tax rate as well as an announcement of new “Enterprise Zones” throughout the UK. Whether this will be enough to encourage small business growth is yet to be seen.