However this is far lower than the 2.5% the Chancellor predicted for 2012 this time last year.
The OBR also predicted that the euro area will fall into negative growth of 0.3% this year.
George Osborne said Britain was not immune to the crisis in the eurozone and that Britain must broaden its export trading partners to countries including India, China and South America.
He said: “Our second goal is a tax system that is more competitive for business than any other major economy in the world.”
Osborne announced that the headline rate of corporation tax will be cut by a further 1% from today bringing it down to 24% from April.
He added: “And we will continue with the two further cuts planned next year and the year after. So that by 2014, Britain will have a 22% rate of corporation tax.
“The biggest sustained reduction in business tax rates for a generation.An advertisement for investment and jobs in Britain.”
Small companies will continue to pay a 20% rate of corporation tax.
The bank levy will rise however to 0.105% from next January “so that the additional corporation tax cuts do not benefit the banks”.
Osborne said the bank levy will raise £2.5bn a year.
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