JANUARY 20072

Economic Outlook

OXFORD ECONOMICS’ FORECAST

2005 2006 2007 2008 2009 2010The UK OutlookDomestic Demand 1.9 2.8 2.7 2.6 3.2 2.8 Private Consumption 1.3 1.9 2.3 2.4 3.0 2.8 Fixed Investment 3.4 5.9 4.8 3.5 4.7 3.5 Stockbuilding (% of GDP) 0.3 0.4 0.4 0.4 0.4 0.4 Government Consumption 3.1 2.3 2.5 2.5 2.5 2.5

Exports of Goods and Services 7.9 10.6 -2.3 5.7 6.0 5.8Imports of Goods and Services 7.0 10.7 -1.8 5.4 6.0 5.5

GDP 1.9 2.7 2.7 2.5 3.1 2.8Industrial Production -1.8 -0.2 -0.2 1.1 1.5 0.6Claimant unemployment (Q4 mn) 0.9 0.9 1.0 1.0 1.0 1.0

Headline RPI (Q4) 2.4 4.0 3.2 2.4 2.7 2.7RPIX (Q4) 2.2 3.5 2.6 2.5 2.5 2.5CPI (Q4) 2.1 2.7 2.0 2.0 2.0 2.0

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

Short-Term Interest Rates (%) 4.70 4.80 5.40 5.00 5.00 5.00Long-Term Interest Rates (%) 4.41 4.50 4.98 5.00 5.00 5.00

Exchange Rate (US$ per £) 1.82 1.84 2.00 1.90 1.84 1.81Exchange Rate (Euro per £) 1.46 1.47 1.50 1.47 1.46 1.46

The World OutlookWorld GDP (2000 PPP) 4.6 5.1 4.6 4.8 4.5 4.4 US 3.2 3.3 2.6 3.3 3.4 3.6 Japan 1.9 2.1 2.0 2.5 2.3 2.2 Eurozone 1.4 2.7 2.3 2.2 2.0 1.9World Trade 8.7 9.2 7.3 7.4 7.6 7.1(UK export-weighted)

The Oxford Economics Forecast(Annual percentage changes unless specified)