UK economy to grow in 2024 after recession, Hunt says in budget speech

UK economy to grow in 2024 after recession, Hunt says in budget speech

Britain's economy is forecast to grow by 0.8% this year after entering a recession in the second half of 2023, finance minister Jeremy Hunt said on Wednesday in possibly his last fiscal statement before an election expected this year.

The new figure for growth was a touch stronger than a forecast for an expansion of 0.7% in the previous outlook for 2024, published by the Office for Budget Responsibility (OBR) in November.

The OBR now projects economic output to expand by 1.9% in 2025 and by 2.0% in 2026, Hunt said in his budget speech.

Those forecasts compared with the OBR's previous expectations for growth of 1.4% and 2.0% in 2025 and 2026.

Hunt and Prime Minister Rishi Sunak have promised voters they will get the economy growing more quickly as they try to overhaul the opposition Labour Party's big opinion poll lead.

Hunt was expected to announce a latest two percentage-point cut to national insurance contributions by workers, having made a similar reduction in November.

Sunak and Hunt raised taxes sharply in 2022 to quell mayhem in the bond market sparked by shortlived former Prime Minister Liz Truss's sweeping tax cut plans.

With Britain's debt burden the heaviest since the 1960s, Hunt has played down calls from within the Conservative Party for major giveaways. Mindful of how Truss sent markets into a tailspin only 18 months ago, he has promised to stick to his plans for less new borrowing.

But he said in his speech that the fall in inflation from a peak of more than 11% means "we can now help families not just with temporary cost of living support but with permanent cuts in taxation".

Hunt also said the OBR now expected Britain's inflation rate to fall below 2% in the coming months.