PARTY POOPERS
Gloomy economists threaten to spoil Jeremy Hunt’s upbeat Autumn Statement by cutting growth forecasts
But the budget watchdog has got things wrongs before, and no longer predicts recession
GLOOMY economists today threatened to spoil Chancellor Jeremy Hunt’s upbeat Autumn Statement by cutting growth forecasts.
Party poopers at the Office for Budget Responsibility also warned of falling living standards — with the overall tax burden hitting its highest level since WW2.
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The OBR — which has consistently been too negative about the country’s fortunes — said the UK economy will grow much more slowly than expected over the next two years.
It now expects 0.7 per cent of growth next year and 1.4 per cent in 2025 — down on its previous forecasts of 1.8 per cent and 2.5 per cent.
This is largely down to its prediction that an older population will work shorter hours and more people will be off sick.
However, the budget watchdog has got it wrong before.
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It is now backing the economy to rise 0.6 per cent this year — having previously said it would fall into a recession.
The OBR said: “The economy has proved more resilient to the shocks of the pandemic and energy crisis than we anticipated.
“But inflation has also been more persistent and interest rates higher than [forecast] in March.”
It warned it will take until 2025 for inflation to fall to the two per cent target, a year later than forecast.
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Price rises mean households will still face the biggest reduction in real living standards since records began in the 1950s.
Real household disposable income will still be 3.5 per cent lower in 2024-2025 than pre-pandemic levels, it added.
The OBR also said despite the tax cuts of Mr Hunt the overall personal tax burden will still rise every year over the next five years to 38 per cent of GDP — the highest since WW2.
Mr Hunt thanked OBR boss Richard Hughes “and his team for their sterling work” in delivering the review.
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