The economy has recovered much more slowly over the past three years than the OBR expected, but the impact on the public finances has been relatively modest in large part because our over-optimism has been concentrated in those areas of nominal income and spending that are relatively lightly taxed: investment rather than consumer spending and profits rather than labour income. Our latest Forecast evaluation report examines the reasons behind the differences in our forecasts from June 2010 and March 2012 and the latest outturn data.

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