The UK economy is set to avoid a recession but people are still expected to face the biggest fall in living standards on record, according to the fiscal watchdog. The Office for Budget Responsibility (OBR) projected that the economy will shrink by less than expected and inflation will fall more sharply than previous forecasts, in an improved economic outlook in the near term.
Declining wholesale energy prices and cooling global inflation have improved the position of the Treasury compared with the last budget statement in November. Previously, the OBR said the UK was due to enter a recession in 2022 and shrink by 1.4% in 2023.
However, the fresh projections show that the economy is set to avoid a technical recession – which means two consecutive quarters of decline – and shrink by 0.2% this year as whole. It is then due to grow by 1.8% in 2024, 2.5% in 2025 and 2.1% in 2026 as growth cools.
