This article is from the source 'bbc' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.
You can find the current article at its original source at https://www.bbc.co.uk/news/business-64963869
The article has changed 10 times. There is an RSS feed of changes available.
Version 8 | Version 9 |
---|---|
People face biggest fall in spending power for 70 years | People face biggest fall in spending power for 70 years |
(about 13 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. |
People face their biggest fall in spending power for 70 years as the surging cost of living eats into wages. | People face their biggest fall in spending power for 70 years as the surging cost of living eats into wages. |
The government's independent forecaster said that household incomes - once rising prices were taken into account - would drop by 6% this year and next. | The government's independent forecaster said that household incomes - once rising prices were taken into account - would drop by 6% this year and next. |
Living standards won't recover to pre-pandemic levels until 2027, it warned. | Living standards won't recover to pre-pandemic levels until 2027, it warned. |
It came as Chancellor Jeremy Hunt said the economy would shrink this year but avoid recession. | It came as Chancellor Jeremy Hunt said the economy would shrink this year but avoid recession. |
Energy and food bills have shot up due to the war in Ukraine and pandemic, and are squeezing household budgets. | Energy and food bills have shot up due to the war in Ukraine and pandemic, and are squeezing household budgets. |
Inflation - the rate at which prices are rising - is currently in double digits. | Inflation - the rate at which prices are rising - is currently in double digits. |
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 |
It is set to more than halve to 2.9% by the end of this year, according to the Office for Budget Responsibility (OBR). But for now, the figure remains very high, and well ahead of average wages. | It is set to more than halve to 2.9% by the end of this year, according to the Office for Budget Responsibility (OBR). But for now, the figure remains very high, and well ahead of average wages. |
The drop in real household disposable income would represent "the largest two-year fall in living standards since records began in the 1950s," Richard Hughes, chairman of the OBR, said. | The drop in real household disposable income would represent "the largest two-year fall in living standards since records began in the 1950s," Richard Hughes, chairman of the OBR, said. |
"We think households are going to dip into some of their savings to help manage the squeeze on living standards and that supports growth in the near term,"he added. | "We think households are going to dip into some of their savings to help manage the squeeze on living standards and that supports growth in the near term,"he added. |
The OBR looks at the government's tax and spending plans in the Budget and then predicts how the country will perform over the next five years. | The OBR looks at the government's tax and spending plans in the Budget and then predicts how the country will perform over the next five years. |
Previously it had expected the UK to fall into recession at the end of last year and continue to shrink all of this year. | Previously it had expected the UK to fall into recession at the end of last year and continue to shrink all of this year. |
A recession is usually defined as when an economy gets smaller for two three-month periods - or quarters - in a row. | A recession is usually defined as when an economy gets smaller for two three-month periods - or quarters - in a row. |
The last time the UK's economy went into recession was in 2020, at the height of the coronavirus pandemic. | The last time the UK's economy went into recession was in 2020, at the height of the coronavirus pandemic. |
The OBR now expects: | The OBR now expects: |
The economy to contract by 0.2% this year but avoid a recession | The economy to contract by 0.2% this year but avoid a recession |
It will then grow by 1.8% in 2024, 2.5% in 2025 and 2.1% in 2026 | It will then grow by 1.8% in 2024, 2.5% in 2025 and 2.1% in 2026 |
Chancellor Jeremy Hunt said the predictions from the OBR were "proving the doubters wrong". | Chancellor Jeremy Hunt said the predictions from the OBR were "proving the doubters wrong". |
But Labour criticised the announcements made during the Budget as "dressing up stagnation as stability". | But Labour criticised the announcements made during the Budget as "dressing up stagnation as stability". |
Chemicals boss Adrian Hanrahan is worried about rising prices | Chemicals boss Adrian Hanrahan is worried about rising prices |
Adrian Hanrahan, managing director of chemicals firm Robinson Brothers in the West Midlands, says that while the forecast is for inflation to fall, at the moment it is very high. | |
That's a huge challenge for the business, he told the BBC. | That's a huge challenge for the business, he told the BBC. |
"I would love to consider growth and we all aspire to growth," he said. | "I would love to consider growth and we all aspire to growth," he said. |
"However, the challenges right now are for us to cope with high energy costs, lack of resources, and labour shortages. Every penny we've got is going into manufacturing, not investing." | "However, the challenges right now are for us to cope with high energy costs, lack of resources, and labour shortages. Every penny we've got is going into manufacturing, not investing." |
The biggest issue Robinson Brothers is grappling with currently is high energy prices, and Mr Hanrahan was disappointed not to hear anything in the Budget to address that. | The biggest issue Robinson Brothers is grappling with currently is high energy prices, and Mr Hanrahan was disappointed not to hear anything in the Budget to address that. |
"All very well talking about growth in two or three years time. It's the here and now that we want, and that wasn't available from the Budget today." | "All very well talking about growth in two or three years time. It's the here and now that we want, and that wasn't available from the Budget today." |
'Out of touch' | 'Out of touch' |
Independent research group the Institute for Fiscal Studies (IFS) said the economic picture had not changed "enormously since the autumn". | Independent research group the Institute for Fiscal Studies (IFS) said the economic picture had not changed "enormously since the autumn". |
IFS director Paul Johnson said the OBR "expects the economy to grow a bit faster in the short-term, and a bit slower in the medium-term". | IFS director Paul Johnson said the OBR "expects the economy to grow a bit faster in the short-term, and a bit slower in the medium-term". |
This would combine to create an economy that was "0.6% larger in real-terms in 2027-28 than under the autumn forecast," he said. | This would combine to create an economy that was "0.6% larger in real-terms in 2027-28 than under the autumn forecast," he said. |
Meanwhile, Labour leader Sir Keir Starmer accused the government of being "out of touch" and putting the country "on a path of managed decline". | Meanwhile, Labour leader Sir Keir Starmer accused the government of being "out of touch" and putting the country "on a path of managed decline". |
The chancellor also said the UK was on track to meet the government's self-imposed spending rules. | The chancellor also said the UK was on track to meet the government's self-imposed spending rules. |
According to these rules, government debt must be falling as a percentage of growth in five years' time. | According to these rules, government debt must be falling as a percentage of growth in five years' time. |
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. |
Additional reporting by Oliver Smith. | Additional reporting by Oliver Smith. |
Related Topics | Related Topics |
Economics | Economics |
UK economy | UK economy |
Jeremy Hunt | Jeremy Hunt |
Budget 2023 | Budget 2023 |