Ahead of the announcement of the emergency budget next week, the Office of Budget Responsibility (OBR), the new fiscal watchdog, said the budget deficit will narrow to 71 billion pounds or 3.9% of GDP by 2015 from 155 billion pounds or 10.9% of GDP this fiscal year which better than the prior forecasts with 22 billion pounds.

The OBR, on the other hand, lowered growth projections for 2011 from 3.25 estimated in March to 2.6%. However, both estimates will be revised on June 22 after the announcement the new budget policies, where George Osborne will introduce the sharpest spending reductions since long while.