THE UK is set to avoid a technical recession, Jeremy Hunt has told MPs, as he set out his first spring budget.

The Chancellor also told the Commons that the Office for Budget Responsibility forecasts now suggest that inflation will fall from 10.7% in the final quarter of last year to 2.9% by the end of 2023.

The body also predicts that growth will rise by 1.8% in 2024 and 2.5% in 2025.


Last year, the Bank of England predicted that the UK would endure a recession of up to 15 months, involving most of 2023.

“In the face of enormous challenges, I report today on a British economy which is proving the doubters wrong," Mr Hunt said to cheers from his own benches.

He added: “Today the Office for Budget Responsibility (OBR) forecast that because of changing international factors and the measures I take, the UK will not now enter a technical recession this year.

“They forecast we will meet the Prime Minister’s priorities to halve inflation, reduce debt and get the economy growing. We are following the plan and the plan is working.”

According to the forecast, the size of the economy will fall by about 0.2%. It had been predicted to fall by 1.4%.

A technical recession happens if the economy shrinks for two quarters in a row.

Mr Hunt announced a raft of measures, including a commitment to maintain the 5p freeze in fuel duty brought in last year.

He also confirmed the extension of the energy price guarantee. It had been due to rise from £2,500 to £3,000.

The Chancellor also pledged charges on pre-payment meters would be brought in line with comparable direct debit charges.

He also unveiled a “Brexit pubs guarantee” which will see duty on draught products up to 11p lower than in supermarkets. Though alcohol duty will increase from August in line with inflation.

READ MORE: Energy Price Guarantee extended to June

The Chancellor also boosted defence spending by £11bn over the next five years and announced a hike in corporation tax from 19% to 25% as expected. 

On pensions, he lifted the tax-free yearly allowance from £40,000 to £60,000.

He also abolished the lifetime allowance - the total amount of money a person can build up in a workplace defined benefit pension scheme before they face more taxes.

One of the biggest spending announcements was his plan to offer free childcare of 30 hours a week for working parents in England. 

The Tory minister said that his spending decisions for the year ahead would ultimately result in an extra £320m in Barnett Consequentials for the Scottish Government. 

The Chancellor said the UK Government would set up 12 new investment zones, which he labelled “12 potential Canary Wharfs”.

He said: “In England, we have identified the following areas as having the potential to host one: West Midlands, Greater Manchester, the North East, South Yorkshire, West Yorkshire, East Midlands, Teesside and, once again, Liverpool.

“There will also be at least one in each of Scotland, Wales and Northern Ireland.”

Mr Hunt added: “For Scotland, Wales and Northern Ireland this Budget delivers not only a new investment zone but an additional £320m for the Scottish Government, £180m for the Welsh Government and £130m for the Northern Ireland Executive as a result of Barnett consequentials.

“On top of which in Scotland, I can announce up to £8.6m of targeted funding for the Edinburgh Festivals as well as £1.5m funding to repair the Cloddach Bridge."

Mr Hunt also confirmed that nuclear power would now be classed as “environmentally sustainable” to drive investment in the energy sector, and said he would launch “Great British Nuclear” to "bring down costs and provide opportunities across the nuclear supply chain to help provide up to one quarter of our electricity by 2050."

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The Chancellor also unveiled a shake-up of benefits and told MPs he would abolish the controversial work capability assessment for disability benefits in England.

As part of the reform, the Tory minister also promised to toughen up sanctions.

He told MPs: “There are more than two million job seekers in this group, more than enough to fill every single vacancy in the economy.”

“Sanctions will be applied more rigorously to those who fail to meet strict work-search requirements or choose not to take up a reasonable job offer.

“For those working low hours, we will increase the Administrative Earnings Threshold from the equivalent of 15 hours to 18 hours at National Living Wage for an individual claimant, meaning that anyone working below this level will receive more work coach support alongside a more intensive conditionality regime.”

He also brought in a new policy of “full expensing” which allows firms to deduct all money invested in IT equipment, plant or machinery. The Treasury say it will be worth an average of £9bn a year to businesses. 

Labour leader, Sir Keir Starmer said the Chancellor’s budget was “dressing up stagnation as stability.”

He said 13 years of Tory government had led to a “doom loop of lower growth, higher taxes and broken public services.”

He said: “A year of stagnation. Growth non-existent. According to the IMF, the worst performing country in the G7 this year, a prediction today confirmed by the OBR, growth downgraded in years to come.

“This is a failure you can measure not just in the figures but in the empty pockets of working people right across the country. 13 years without wage growth. 13 years no better off. 13 years stuck in a doom loop of lower growth, higher taxes and broken public services.”

He said the OBR had made clear “things don’t look any better in the long run”.

He added: “A broken labour market holding back our prospects, seven million on the NHS waiting lists, ill-health and disability on the rise. And the consequences, as we’ve just heard, deferred to the future.

“The classic short-term sticking plaster cycle. Decisions cynically ducked today. Pain for working people tomorrow. It doesn’t have to be like this.”

The SNP's Economy spokesperson Stewart Hosie said the budget would fail "to make a dent in the cost of living crisis."

He added: "The Chancellor should have chosen to help families by cutting energy bills, raising public sector pay with inflation and introducing a Real Living Wage. Instead he has chosen to make people poorer - withdrawing vital support and imposing real-terms cuts to incomes.

"With the pro-cuts, pro-Brexit Labour Party failing to provide any meaningful opposition, it's clear Scotland will continue to pay a high price under Westminster control - and independence is the only way for Scotland to build a strong, fair and prosperous future."