Chancellor Jeremy Hunt today said the UK is now in recession and thousands of people will lose their jobs. The Office for Budget Responsibility forecast more than half a million people would lose their jobs, while living standards will crash as a result of rising prices.
The OBR’s assessment said: “Rising prices erode real wages and reduce living standards by 7% in total over the two financial years to 2023-24 (wiping out the previous eight years’ growth), despite over £100 billion of additional Government support.
“The squeeze on real incomes, rise in interest rates, and fall in house prices all weigh on consumption and investment, tipping the economy into a recession lasting just over a year from the third quarter of 2022, with a peak-to-trough fall in GDP of 2%.
“Unemployment rises by 505,000 from 3.5% to peak at 4.9% in the third quarter of 2024.”
Mr Hunt said unemployment is expected to rise from 3.5% today to 4.9% by 2024. The OBR has said that the UK is “now in recession”, Jeremy Hunt has told the Commons.
Mr Hunt said the Office for Budget Responsibility forecasts the UK’s inflation rate to be 9.1% this year and 7.4% next year and that his autumn statement will cause inflation to “fall sharply from the middle of next year”.
Chancellor Jeremy Hunt told the Commons: “In the face of unprecedented global headwinds, families, pensioners, businesses, teachers, nurses and many others are worried about the future.
“So today we deliver a plan to tackle the cost-of-living crisis and rebuild our economy.
“Our priorities are stability, growth, and public services.
“We also protect the vulnerable because to be British is to be compassionate and this is a compassionate Conservative government.”
The Office of Budget Responsibility has confirmed “global factors” are the “primary cause” of inflation, the Chancellor said.
The Office for Budget Responsibility (OBR) has said it expected UK gross domestic product (GDP) to slump as it significantly downgraded previous projections that the economy would actually grow by 1.8% in 2023.
The OBR also pulled down growth expectations for the following year in the face of continued inflationary pressure.
It has, however, slightly upgraded the total economic growth expected this year to 4.2% from 3.8% in the March statement.
The OBR has also predicted that inflation will hit an average rate of 9.1% this year and 7.4% in 2023.
In his autumn statement, Chancellor Jeremy Hunt said the forecasts “confirm that our actions today help inflation to fall sharply from the middle of next year”.
“They also judge that the UK, like other countries, is now in recession,” he added.
Mr Hunt confirmed in his speech that new spending reductions and tax plans are intended to secure an extra £55 billion to help address the UK’s fiscal hole.
The hole is the extra money needed by the Government in order to meet self-imposed targets to bring down the size of state debt relative to national income.
The announcement comes a day after inflation rocketed to a 41-year-high of 11.1% in October due to surges in the cost of energy and food.
The OBR’s latest forecasts have been long awaited after the official forecasting body was not used during the September mini-budget, led by former chancellor Kwasi Kwarteng.
Economists partially linked the shock to the pound and bond yields following the mini-budget announcement to a lack of visibility on the impact of the previous government’s fiscal plan.
