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UK economy set to shrink but avoid official recession | UK economy set to shrink but avoid official recession |
(about 2 hours later) | |
The UK is expected to avoid a technical recession in 2023, Jeremy Hunt tells the Commons. | The UK is expected to avoid a technical recession in 2023, Jeremy Hunt tells the Commons. |
The UK is expected to avoid a technical recession in 2023, Jeremy Hunt tells the Commons. | The UK is expected to avoid a technical recession in 2023, Jeremy Hunt tells the Commons. |
The UK economy is expected to shrink this year but narrowly avoid an official recession in a better-than-expected performance for the country. | |
Inflation - the rate at which prices rise - is also expected to more than halve this year dropping to 2.7%. | |
However, even with the improved forecast for economic prospects, the government's forecaster warned of a big drop in living standards. | |
Analysts warned that the UK was "not out of the woods yet". | |
Independent research group The Institute for Fiscal Studies said the economic picture hadn't changed "enormously since the autumn". | |
"The Office for Budget Responsibility (OBR) expects the economy to grow a bit faster in the short-term, and a bit slower in the medium-term, combining to produce an economy 0.6% larger in real-terms in 2027-28 than under the autumn forecast," director Paul Johnson said. | |
Chancellor Jeremy Hunt said the prediction from its forecaster was "proving the doubters wrong". | |
But Labour leader Sir Keir Starmer accused the government of being "out of touch" and putting the country "on a path of managed decline", saying it was "dressing up stagnation as stability". | |
Budget 2023: Key points at-a-glance | Budget 2023: Key points at-a-glance |
What the Budget means for you and your money | What the Budget means for you and your money |
Tax on company profits to rise to 25% next month | Tax on company profits to rise to 25% next month |
But while the UK will escape the usual definition of a recession, which is two consecutive three-month periods of decline, once inflation is taken into account incomes are expected to fall by 5.7% - the largest two-year fall since records began in the mid-1950s. | |
The OBR warned living standards would not recover to pre-pandemic levels until at least 2027. | The OBR warned living standards would not recover to pre-pandemic levels until at least 2027. |
How can we avoid a recession and still shrink? | How can we avoid a recession and still shrink? |
The chancellor has announced that the economy will avoid a "technical recession" this year, but that doesn't mean we're out of the woods. | The chancellor has announced that the economy will avoid a "technical recession" this year, but that doesn't mean we're out of the woods. |
The size of the economy - the value of everything we make and produce this year - is set to fall by about 0.2% according to the chancellor's figures. | The size of the economy - the value of everything we make and produce this year - is set to fall by about 0.2% according to the chancellor's figures. |
It becomes a "technical recession" if the economy shrinks for two seasons (three-month periods) in a row. So it's possible to avoid the technical definition even if the economy is doing badly if it shrinks in the spring and autumn but rises in the summer. | It becomes a "technical recession" if the economy shrinks for two seasons (three-month periods) in a row. So it's possible to avoid the technical definition even if the economy is doing badly if it shrinks in the spring and autumn but rises in the summer. |
A forecast of a 0.2% shrinkage may be better than we thought last autumn (shrinking by 1.4%) but it's hardly anyone's definition of doing well. | A forecast of a 0.2% shrinkage may be better than we thought last autumn (shrinking by 1.4%) but it's hardly anyone's definition of doing well. |
The chancellor also said the UK was on track to meet the government's self-imposed fiscal rules. | The chancellor also said the UK was on track to meet the government's self-imposed fiscal rules. |
According to these rules, government debt must be falling as a percentage of economic output in five years' time and the budget deficit must be below 3% of gross domestic product over the same time period. | |
Related Topics | Related Topics |
Economics | Economics |
UK economy | UK economy |
Jeremy Hunt | Jeremy Hunt |
Budget 2023 | Budget 2023 |