The Office of Budget Responsibility (OBR) has reacted to the Chancellor's Spring Budget announcement.
In his speech, Jeremy Hunt outlined a plan aimed at building long-term growth in the UK, focusing on creating a high-wage, high-skill economy to stimulate more investment, jobs, productive public services, and lower taxes.
However, due to limited budget flexibility, plans for significant tax reductions before the impending election had to be scaled back. The OBR noted that the Chancellor's financial leeway was around £9 billion, less than the £13bn available in November, which they deemed insufficient for major fiscal changes.
The OBR's report emphasises the need for a clear strategy to boost growth four years after the COVID-19 pandemic's onset. It shows a minimal GDP increase of 0.1% in 2023, with a slight improvement expected: growth projections of 0.8% in 2024 and gradual increases in the following years, reaching up to 1.9% in 2025 and slightly declining to 1.7% by 2028.
These updated forecasts suggest a more optimistic outlook compared to previous estimates, with improved living standards and household incomes expected to return to pre-pandemic levels by 2025/26, two years earlier than initially thought.
Inflation is predicted to average 1.4% by the end of 2024, with the Bank Rate anticipated to drop to 4.2% to support economic growth.
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