The UK will avoid a technical recession this year and the inflation will fall to 2.9 per cent by the end of 2023, Chancellor of the Exchequer Jeremy Hunt said.
The fiscal watchdog Office for Budget Responsibility (OBR) has forecast that "because of changing international factors and the measures I take, the UK will not now enter a technical recession this year," Hunt added on Wednesday during his Spring Budget 2023 speech.
The Chancellor on Wednesday unveiled a series of plans to speed up the struggling economy, including childcare reforms, tax cuts for businesses, and measures to ease cost-of-living burden for households, Xinhua news agency reported.
Hunt added that despite continuing global instability, the OBR had reported that inflation in the UK would fall from 10.7 per cent in the final quarter of 2022 to 2.9 per cent by the end of this year.
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The government remained steadfast in its support for the central bank as it took action to return inflation to the 2-per cent target, he said.
"High inflation is the root cause of the strikes we have seen in recent months. We will continue to work hard to settle these disputes but only in a way that does not fuel inflation," he added.
Despite the new forecast, analysts still expect a gloomy economy ahead.
While the OBR no longer forecast a recession this year, and the 2024 growth was revised higher, growth in future years was revised down, and the economy in 2027/28 is expected to be broadly the same size as it was in November, said Paul Dales, an economist at Capital Economics consultancy.
A monthly comparison of independent projections published by the UK Treasury on Wednesday showed an average new forecast of 0.5-per cent contraction for the UK economy in 2023 and 0.8-per cent growth in 2024.
