The UK is currently in a recession that will last through 2023, according to the Government's spending watchdog.
The Office for Budget Responsibility (OBR) predicted in its economic report that took into account the Government's spending and tax plans that Chancellor Jeremy Hunt announced in his Autumn Statement on 17 November.
"Without the energy price guarantee and other measures announced since March 2022, the recession would be 1.1 percentage points deeper", the OBR wrote.
Meanwhile, the economy is forecast to have grown by 4.2% in 2022.
Inflation has already peaked at 11.1% in September 2022, according to the OBR, and will drop "sharply" in 2023 before reaching "below zero" in the middle of the decade and returning to the target of 2% in 2027.
Rising prices will erode real wages and reduce living standards by 7% over the two financial years to 2023/24, wiping out the previous eight years' growth, according to the OBR.
Unemployment is estimated to rise by 505,000 from 3.5% to a peak of 4.9% in the third quarter.
Paul Johnson, director of the Institute of Fiscal Studies, said:
"Surging global energy prices have made the UK a poorer country. The result is an OBR forecast that the next two years will see the biggest fall in household incomes in generations."
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