2023 Spring Budget - the economic picture

15 Mar 2023

Within his Spring Budget speech, Chancellor Jeremy Hunt announced that the UK economy 'will not now enter a technical recession this year'.

In its official report, independent forecaster the Office for Budget Responsibility (OBR) forecasts the size of the UK economy to shrink by 0.2% this year. The OBR expects inflation to more than halve to 2.9% by the end of 2023.

In its report, the OBR increased its growth forecast for 2024 to 1.8%, up from 1.3%. It forecasts that the UK economy will grow by 2.5% in 2025, 2.1% in 2026 and 1.9% in 2027.

The OBR also warned that a significant drop in living standards can be expected in the future, with standards not recovering to their pre-pandemic levels until 'at least 2027'. It expects incomes to fall by 5.7% between 2022 and 2024, representing the largest two-year fall since records began.

Commenting on UK economic growth, the Chancellor said: 'Since 2010 we've grown more than major countries like France, Italy or Japan and about the same as Europe's largest economy, Germany.

'We've halved unemployment, cut inequality and reduced the number of workless households by one million.'