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UK Chancellor Jeremy Hunt on Wednesday set out a fiscal policy statement which features ‘110 growth measures’, set alongside a mixed set of forecasts for the economy and public sector debt from the Office for Budget Responsibility.
The publicly funded OBR provides independent economic forecasts to the Treasury.
The OBR predicts the UK economy will grow by 0.6% this year, 0.7% in 2024 and 1.4% in 2025. The 2023 forecast is brighter than what the body predicted in March, when it saw the economy shrinking by 0.2% this year. However, the outlook for 2024 and 2025 growth was lowered significantly from 1.8% and 2.5%, respectively, in March.
The OBR predicted the UK annual inflation rate will ease to 2.8% by the end of 2024, before falling below the Bank of England’s 2% target in 2025.
The Office for National Statistics earlier in November said consumer prices rose 4.6% annually in October, slowing sharply from the 6.7% pace in September. The reading was lower than market consensus of 4.8%, which also was the forecast by the Bank of England.
Hunt said the OBR predicts the UK budget deficit to stand at 4.5% of gross domestic product in the 2023-24, then to 3%, 2.7%, 2.3%, 1.6% and to 1.1% through to 2028-29, the end of the OBR forecast range. At the end of the range, debt is expected to sit at 94% of GDP, Hunt added.
Hunt, parachuted into the chancellor role following the mini-budget turmoil last year, said his autumn statement measures will look to remove ‘planning red tape’ and improve productivity.
Among the measures announced, was the freezing of all alcohol duty until August 1, as well as a plan to invest £110 million over this year to unlock ‘40,000 homes’ as well as a plan to invest £500 million to make the UK an ‘AI powerhouse’.
Elsewhere, measures to ease the pressure from the cost of living crisis include lifting the universal credit benefit by 6.7% from April, so in line with September’s annual inflation rate, as opposed to the cooler October figure.
Hunt said the government’s total commitment to soothing cost of living pressure now stands at £104 billion.
‘That includes paying around half the cost of the average energy bill since last October and amounts to an average of £3,700 per household,’ Hunt said.
There were also tax giveaways. Hunt announced the main 12% rate of employee national insurance will be trimmed to 10% from January 6.
‘I would normally bring in a measure like this for the start of the new tax year in April, but instead tomorrow I’m introducing urgent legislation to bring it in from January 6, so that people can see the benefit in their payslips at the start of the new year,’ Hunt added.
Hunt’s ruling Conservative Party is expected to call a national election by the end of next year.
In addition in the autumn statement on Wednesday, there was a boost for the retail and hospitality sector. Hunt said he will extend the 75% discount on business rates up to £110,000 for another year. The measures had been due to end on March 31.
Sterling was slightly weaker in the wake of the statement. The pound bought $1.2527 around 1330 GMT, down from $1.2542 before Hunt took the despatch box.
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