Growth in 2013, 2014 and 2015 is forecast to be 2.1%, 2.7% and 3% respectively.
But in his Autumn Statement today Chancellor George Osborne warned that Britain could see “a much worse outcome” than this if eurozone leaders failed to find a sustainable solution to the Euro crisis soon.
He said: “If the rest of Europe heads into recession it may be hard to avoid one here.”
Osborne confirmed the government is contingency planning for all possible outcomes of the eurozone crisis including a partial breakup of the single currency.
The OBR also reported that the external inflation shock from international energy and food costs was the reason for Britain’s slowdown in GDP growth.
The OBR has also predicted unemployment to rise to 8.7% next year before falling to 6.2%.
Shadow Chancellor Ed Balls called it a “colossal failure” and highlighted flat lining growth and an extra £112bn in government borrowing.
