UK Budget 2023: Economy Set to Avoid Recession

0:00

/0:00

1×

Facts

• Following UK Chancellor Jeremy Hunt's announcement of the 2023 budget, the Office for Budget Responsibility (OBR) forecast that the UK won't enter a technical recession this year, with inflation reportedly set to drop to 2.9% — a reduction by more than half its current rate — by the end of 2023.¹
• The budget included scraping the lifetime allowance on tax-free pension contributions and continuing both the freeze on fuel duty for another year and government support for Brits' energy bills until June. Corporation tax will also rise from 19% to 25%, and defense spending will go up by £11B ($13.2B) in the next five years.²
• Wednesday's budget comes amid ongoing challenges to the UK economy, including skyrocketing gas and electricity bills and growing turbulence in global financial markets after concerns about mammoth European lender Credit Suisse.³
• Hunt also addressed parents' concerns about childcare, announcing 30 hours of free weekly childcare for children under three years of age and additional funding for schools and local authorities providing 'wraparound'' care between 8 a.m. and 6 p.m.⁴
• While £9B ($10.8B) of business tax breaks were put at the heart of Hunt's 'Budget for growth,' it also focused on reinvigorating Britain's workforce by prompting the economically inactive back to employment.⁵
• Although fresh forecasts have revealed a contrastingly positive outlook on the UK economy than was previously predicted, the economy is still set to shrink by 0.2% in the coming year. Analysts say Britain should recover to an annual growth rate of 1.9% by 2027.⁵

Sources: ¹Sky news, ²BBC News, ³Guardian, ⁴CNBC and ⁵Ft.

Narratives

• Right narrative, as provided by Bloomberg. This budget was a minimalist masterclass. By steering clear of controversial or divisive topics, Hunt and the Conservatives have kept their powder dry in the lead-up to the next election. Given their current polling, a dull balance sheet that shows just enough attention to the cost-of-living crisis facing voters (through its childcare and energy bill provisions) without overspending is about as strategic a move as the government could make.
• Left narrative, as provided by Mirror. After 15 years in government, the Conservatives are disguising a faltering economy as a period of stability. Despite calling it a budget for growth, the economy is still shrinking and ordinary Brits are paying the price for Tory mismanagement. Real living standards are continuing to fall while governments are prioritizing the one percent.