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Fiscal watchdog expected to downgrade growth forecasts

Office for Budget Responsibility expected to slash UK growth forecast to as low as 2 per cent.

The newly created Office for Budget Responsibility (OBR) is expected to downgrade the previous Labour government's growth estimates later today.

At the last budget, in March, then chancellor, Alistair Darling, said that GDP would grow by between 3 per cent and 3.5 per cent next year.

However, the new fiscal watchdog is expected to say that that was too optimistic, and cut the figure to as low as 2 per cent.

These figures, the first produced by the independent body, will set the tone for the emergency budget on 22 June.

The Chancellor, George Osborne, set up the OBR, led by Sir Alan Budd, to prevent government from manipulating economic figures for political ends. Forecast have always previously been made by the Treasury.

Government borrowing last year was £11bn lower than Darling predicted. He has said that he will demand a "very big apology" from David Cameron if today's figures are more favourable than those he forecast.