Rebalancing the economy

1.30  Rebalancing of expenditure in the UK economy away from government and consumer spending towards net trade and investment has been progressing, although the global backdrop is now acting as a significant headwind.

1.31  The OBR forecast the economy will rebalance in the coming years. As global conditions normalise, private sector investment is forecast to grow strongly. The OBR forecast business investment growth to pick up over the forecast period and to contribute over one percentage point a year on average to growth from 2014. The contribution from net trade over the previous few years has been revised up by the ONS, and is now more consistent with the response of net trade to previous periods of depreciation. Net trade, which made a negative contribution to growth on average in the pre-crisis decade, is forecast to make a positive contribution to growth over the forecast period.

1.32  Chart 1.4 shows the extent of the rebalancing forecast by the OBR, with the share of net trade and total investment in GDP rising, while government and private consumption falls over the forecast period, remaining lower over the forecast horizon than in the pre-crisis decade.