The biggest surprise from today’s Budget was not an announcement, but the forecasts that gave Jeremy Hunt room for manoeuvre.
The Office for Budget Responsibility has revised its forecasts for economic growth and inflation towards the upside. The OBR no longer expects the UK to enter into a technical recession (two consecutive quarters of negative growth). Overall, it is predicting a small contraction of 0.2 per cent this year, which will be followed by an average of 2 per cent growth (1.8 per cent in 2024, 2.5 per cent in 2025, 2.1 per cent in 2026 and 1.9 per cent in 2027).
Moreover, the OBR predicts a big fall in the headline rate of inflation, from 10.7 per cent at the end of last year, down to 2.9 per cent by the end of this year (less than one percentage point off the Bank’s target).
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