LONDON (REUTERS) - Britain has raised its official forecasts for economic growth for 2017 but lowered them for the following three years, finance minister Philip Hammond said on Wednesday (March 8) in Britain's first full budget since the referendum decision to leave the European Union.

The Office for Budget Responsibility (OBR) forecast gross domestic product would grow by 2 per cent in 2017, up from a forecast of 1.4 per cent made in November, but lower than a forecast of 2.2 per cent made a year ago, before the Brexit vote.

Hammond told parliament the OBR now saw growth in 2018 at 1.6 per cent compared with November's forecast of 1.7 per cent.

Growth forecasts in 2019 and 2020 were 1.7 per cent and 1.9 per cent compared with the previous forecast of 2.1 per cent for both years. By 2021 the growth forecast was 2 per cent, the same figure forecast in November.

Britain's economy had been expected to slow sharply after the Brexit vote in June. But consumers continued to spend heavily and helped the economy to grow by 1.8 per cent, faster than all other Group of Seven economies in 2016 bar Germany.

However, signs are growing that shoppers are turning more cautious as the tumble in the value of the pound following the referendum pushes up inflation.

And Prime Minister Theresa May plans to launch Britain's EU divorce talks before the end of March, starting a process that is expected to make companies wary about long-term investments.