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UK economy to do better than expected, says Hunt UK economy to avoid recession, says Hunt
(32 minutes later)
The UK is expected to avoid a recession this year, according to the government's independent forecaster. The UK economy is set to shrink this year but avoid a technical recession, according to the government's independent forecaster.
The prediction from the Office for Budget Responsibility (OBR) came as Chancellor Jeremy Hunt set out the government's growth plans in the Budget. The Office for Budget Responsibility (OBR) now expects the size of the economy to fall by 0.2% in 2023.
A recession is usually defined as when the economy shrinks for two three-month periods - or quarters - in a row. But it will escape the usual definition of a recession, which is two consecutive three-month periods of decline, Chancellor Jeremy Hunt said.
It came as he set out the government's growth plans in the Budget.
The OBR also said inflation would more than halve to 2.9% by the end of 2023.The OBR also said inflation would more than halve to 2.9% by the end of 2023.
Inflation - the rate at which prices are rising - is currently in double digits, driven by soaring food and energy prices.Inflation - the rate at which prices are rising - is currently in double digits, driven by soaring food and energy prices.
Budget 2023: Key points at-a-glance
In a growing economy, the value of the goods and services that the country produces - measured by gross domestic product (GDP) - increases each quarter.In a growing economy, the value of the goods and services that the country produces - measured by gross domestic product (GDP) - increases each quarter.
It is a sign that people are doing more work and, on average, getting a little bit richer.It is a sign that people are doing more work and, on average, getting a little bit richer.
But sometimes the level of GDP falls, and that is a sign that the economy is doing badly.But sometimes the level of GDP falls, and that is a sign that the economy is doing badly.
The OBR said the economy was still likely to shrink this year, but by less than it previously thought.The OBR said the economy was still likely to shrink this year, but by less than it previously thought.
It now expects GDP to fall by 0.2% in 2023, having predicted a 1.4% drop six months ago.It now expects GDP to fall by 0.2% in 2023, having predicted a 1.4% drop six months ago.
"After this year the UK economy will grow in every single year of the forecast period: by 1.8% in 2024; 2.5% in 2025; 2.1% in 2026; and 1.9% in 2027," Mr Hunt said."After this year the UK economy will grow in every single year of the forecast period: by 1.8% in 2024; 2.5% in 2025; 2.1% in 2026; and 1.9% in 2027," Mr Hunt said.
Mr Hunt said the economy was "proving the doubters wrong", despite growth remaining lacklustre this year.
The growth forecasts for 2025, 2026 and 2027 are also downgrades compared with what the OBR was expecting six months ago.
The chancellor also said the UK was on track to meet the government's self-imposed fiscal rules.
"At the Autumn Statement I also announced that public sector net borrowing must be below 3% of GDP over [five years' time]," Mr Hunt said.
"The OBR confirm today that we are meeting that rule with a buffer of £39.2bn. In fact our deficit falls in every single year of the forecast."
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Jeremy HuntJeremy Hunt
Budget 2023Budget 2023