LONDON, Nov 22 — Britain’s economy will grow much more slowly than previously thought in the next couple of years, finance minister Jeremy Hunt said today as he spelt out his plans to speed up the economy in a budget update speech.
Gross domestic product is forecast to grow by 0.7 per cent in 2024, Hunt said, much weaker than a forecast for an expansion of 1.8 per cent in the previous outlook published by the government’s budget watchdog in March.
The Office for Budget Responsibility (OBR) also forecast economic output would grow by 1.4 per cent in 2025 and by 1.9 per cent in 2026. Those forecasts were weaker than the OBR’s previous forecasts of growth of 2.5 per cent and 2.1 per cent respectively.
Britain’s economy has struggled with high inflation and the latest OBR forecasts showed the consumer price index was expected to grow by 2.8 per cent next year, up from the March forecast of 0.9 per cent.
Prime Minister Rishi Sunak this week promised “responsible” tax cuts to help the economy, mindful of last year’s “mini-budget” turmoil in financial markets triggered by his predecessor Liz Truss’s plans for much bigger tax cuts.
British newspapers have reported that Hunt will announce a cut to national insurance contributions by workers and the permanent extension of incentives to boost business investment.
Sunak is expected to call a national election in 2024 which opinion polls suggest the opposition Labour Party is on course to win.
This time last year, Sunak and Hunt raised taxes sharply to quell the mayhem in the bond market and the current parliament is estimated to be on track to have introduced the biggest tax increases of any UK legislature since World War Two.
Britain’s economy has been burdened by the highest inflation rate among its rich country peers although the pace of price growth has slowed from more than 11 per cent just over a year ago to 4.6 per cent in October. — Reuters
