Team Blitz India
LONDON: UK’s economy will grow slower than expected, and Inflation to be more persistent and domestically fuelled than previously thought, according to the Office for Budget Responsibility (OBR).
The economy has proved to be more resilient to the shocks of the pandemic and energy crisis than anticipated. By the middle of this year, the level of real GDP stood nearly two per cent above its pre-pandemic level and around three per cent above the OBR March forecast, it said.
Living standards are also not expected to return to prepandemic levels until 2027-28, added the Economic and fiscal outlook – November 2023.
Interest rates higher :
“Markets now expect interest rates will need to remain higher for longer to bring inflation under control. Despite the more challenging outlook for the real economy, higher inflation leaves nominal GDP nearly 5½ per cent higher by the start of 2028 than we forecast in March,” it stated in the outlook.
It comes as Chancellor Jeremy Hunt announced tax cuts and a rise in benefits in his ‘Autumn Statement for Growth’ on November 22.November 22.
Britain’s economy and fiscal forecaster OBR is independent from the Government. It publishes two sets of economic forecasts a year, which are used to predict what will happen to Government finances. These are based on its best guess about what will happen, and are subject to change.
“From a peak of 10.7 per cent in the last quarter of last year, CPI inflation is now expected to fall to 4.8 per cent in the final quarter of 2023. As a moderate degree of spare capacity in the economy opens up and gas prices fall further, inflation dips slightly below the 2 per cent target between 2025 and 2027, before returning to it at the forecast horizon,” the OBR stated.
