Economic Outlook

2005 2006 2007 2008 2009 2010The UK OutlookDomestic Demand 1.9 3.0 2.7 2.6 3.1 3 Private Consumption 1.4 1.9 2.3 1.9 2.9 2 Fixed Investment 3.0 6.5 7.6 3.0 2.9 3 Stockbuilding (% of GDP) 0.3 0.5 -0.1 0.2 0.5 0.6 Government Consumption 3.0 2.4 2.5 2.5 2.2 2

Exports of Goods and Services 7.9 11.6 -4.6 5.6 6.0 5.9Imports of Goods and Services 7.0 11.8 -3.8 5.3 5.4 5.4

GDP 1.9 2.8 2.7 2.5 3.1 3Industrial Production -1.9 0.2 0.5 0.9 1.3 1.0Claimant unemployment (Q4 mn) 0.91 0.94 0.94 1.00 1.01 1.02

Headline RPI (Q4) 2.3 4.0 3.4 2.3 2.7 2RPIX (Q4) 2.2 3.4 2.6 2.4 2.5 2CPI (Q4) 2.1 2.7 2.1 1.9 2.0 2

Current Balance (% of GDP) -2.4 -3.4 -3.1 -3.1 -3.0 -2.8Government Budget (% of GDP) -3.2 -2.9 -2.5 -2.6 -2.3 -2.2

Short-Term Interest Rates (%) 4.70 4.80 5.46 5.02 5.00 5.00Long-Term Interest Rates (%) 4.41 4.50 5.03 4.92 4.93 5.04

Exchange Rate (US$ per £) 1.82 1.84 1.98 1.89 1.84 1.81Exchange Rate (Euro per £) 1.46 1.47 1.49 1.46 1.46 1.46

The World OutlookWorld GDP (2000 PPP) 4.7 5.2 4.8 4.8 4.5 4 US 3.2 3.3 2.4 3.0 3.1 2 Japan 1.9 2.2 2.3 2.4 2.1 2 Eurozone 1.5 2.8 2.6 2.2 2.0 1World Trade 8.9 9.0 7.3 7.6 7.2 7(UK export-weighted)

The Oxford Economics Forecast(Annual percentage changes unless specified)

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.9

.5

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.7

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.9

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MAY 20072 OXFORD ECONOMICS’ FORECAST