Jeremy Hunt has announced that the UK is no longer forecast to enter a “technical recession” this year, citing the latest Office for Budget Responsibility’s (OBR) projection.
Delivering his Spring Budget statement in the Commons, the UK’s Chancellor of the Exchequer stated: “Today the Office for Budget Responsibility forecast that because of changing international factors and the measures I take, the UK will not now enter a technical recession this year.
“Despite continuing global instability, the OBR report today that inflation in the UK will fall from 10.7% in the final quarter of last year to 2.9% by the end of 2023.”
According to the Chancellor’s OBR data, the UK’s economic output is still to fall by 0.2% in 2023, but that the the economy will grow each year after that until 2027.
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Hunt added that the independent OBR forecast showed that economic output in the UK is set to grow by 1.8% in 2024 and by 2.5% in 2025.
The latest OBR forecast is in contrast with the bleak calculations made in November 2022, which predicted the UK economy would shrink by 1.4% in 2023, and a lower growth rate of 1.3% for 2024.
Hunt added that the OBR forecast, “will meet the Prime Minister’s priorities to halve inflation, reduce debt and get the economy growing”.
The OBR data is in contrast to last month’s IMF forecast for UK economic growth, which predicted Britain’s economy would shrink by 0.6% in 2023.
The UK is still the only G7 economy that has yet to recover to pre-pandemic levels of industrial output.
The OBR’s document on the UK’s fiscal and economic outlook for March stated: “CPI inflation peaked at 11.1% in October and is expected to fall sharply to 2.9% by the end of 2023, a more rapid decline than we expected in November.
“The drop in wholesale gas prices also means that household energy bills are expected to fall below the energy price guarantee limit from July and to £2,200 by the end of the year.”
The document added: “Inflation returns to target in early 2028, with the offsetting effects of lower gas prices and increased domestically generated inflation leaving the consumer price level at the end of our forecast little changed from November.”
Prior to his speech, Hunt had already announced that Government support for energy bills will continue for three months from April, protecting consumers from an average increase of £500.
Typical household energy bills were scheduled to rise to £3,000 a year from April, however, the Chancellor said: “High energy bills are one of the biggest worries for families, which is why we’re maintaining the energy price guarantee at its current level.
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“With energy bills set to fall from July onwards, this temporary change will bridge the gap and ease the pressure on families, while also helping to lower inflation too.”
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