UK economy will grow more slowly this year than previously predicted and inflation will be much higher, finance minister Rishi Sunak said as he gave a budget update which included measures to ease a cost-of-living squeeze.
Sunak, announcing forecasts drawn up by the Office for Budget Responsibility (OBR), said on Wednesday the economy was likely to grow by 3.8% in 2022, a sharp slowdown from a forecast of 6.0% made in October.
Inflation, as measured by the consumer price index, is now seen at 7.4% in 2022, compared with October’s forecast of 4.0%.
Sunak is under pressure to offer more help to Britons who are facing their worst cost-of-living squeeze in at least 30 years and he announced a cut to fuel duty of 5 pence per litre starting later on Wednesday and lasting until March next year.
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Earlier, data showed Britain’s consumer price inflation hit a 30-year high of 6.2% last month, driven by soaring costs for energy and food, which poorer households especially may find hard to cut back on.
The International Monetary Fund estimates British gross domestic product will grow by 4.7% in 2022, the fastest among Group of Seven nations. The UK economy suffered a COVID-19 slump of more than 9% in 2020 and grew by over 7% in 2021.
The OBR forecast that gross domestic product would grow by 1.8%, 2.1% and 1.8% in 2023, 2024 and 2025, Sunak said.
In October, the OBR had forecast growth of 2.1%, 1.3% and 1.6% over the next three years.
Writing by William Schomberg
Source: ZAWYA
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