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Budget 2023: Britain set to avoid recession this year and inflation to fall to 2.9%, Jeremy Hunt reveals
BRITAIN is set to avoid recession this year AND inflation will tumble to just 2.9 per cent - Jeremy Hunt revealed this morning.
The Chancellor updated the nation on the latest predictions for the economy from top experts at the Office for Budget Responsibility.
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Inflation - which means the amount prices are going up - will fall from a staggering 10.7 per cent to 2.9 per cent by the end of the year, he revealed.
However, the economy will shrink by 0.2 per cent this year.
It means the UK will technically avoid a recession - which is two quarters in a row of negative growth, or shrinking.
The OBR said just last year that the economy would contract by a staggering 1.4 per cent.
In less cheery news, the economic watchdog said GDP won't return to pre-pandemic levels until the middle of 2024.
And the tax burden will continue to suffocate workers and businesses as it hits a post-war record high of 37.7% of GDP in 2026.
Meanwhile, living standards are expected to fall by 6% into 2024.
Energy bills and inflation are being blamed for the largest standards drop since records began.
And unemployment is predicted to rise from 3.7% to 4.4% in 2024.
Mr Hunt said: "That left many families feeling concerned about the future.
"But today, the OBR forecast we will not enter a recession at all this year with a contraction of just 0.2 per cent.
Spring Budget at a glance
- Millions of households will save £160 after the Energy Price guarantee was extended
- Cigarette prices will rise after the government hiked tobacco tax
- Drivers won’t pay more for fuel as duty was frozen and a 5p cut will continue in a huge win for The Sun’s campaign to keep it low
- The lifetime allowance on pensions will be axed and the annual allowance will increase
- The government will give councils £500m to fix potholes
- Millions of energy customers on prepayment meters will no longer pay more
- Jeremy Hunt unveiled 12 low-tax investment zones across the country
- Alcohol duty on beer in pubs will be cut, saving 11p per pint - but tax on wine and spirits will increase
- The Chancellor confirmed that benefits will rise next month
- Corporation tax will rise to 25% next month
- The government will extend free childcare to 30 hours for one and two-year-olds
- Working parents on Universal Credit will get more for childcare and costs covered straight away
"And after this year the UK economy will grow in every single year of the forecast period: by 1.8 per cent in 2024; 2.5 per cent in 2025; 2.1 per cent in 2026; and 1.9 per cent in 2027."
Financial chiefs also predicted that more people will go back into work this year - another 170,000.
Mr Hunt told MPs today: "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 per cent in the final quarter of last year to 2.9 per cent by the end of 2023."
It comes after the UK economy rebounded by better-than-expected growth in January.
It grew by 0.3 per cent - boosted by our services sector and the return of the Premier League.
It's a return to growth after the UK economy shrunk by 0.5% in December and grew just 0.1% in November.
Find out more by reading our Spring Budget live blog here.
Gloomy Bank of England chiefs had predicted a recession of at least a year starting at the beginning of the year, but these predictions have yet to come true.
Some economists think Britain may avoid a recession altogether now.
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