The UK economy is set to grow more than expected over the next two years as it rebounds from recession, according to the UK fiscal watchdog.
But it predicted growth would ease back earlier than previously forecast in the longer-term.
New economic predictions also showed that UK inflation is set to drop below the Government’s 2% target rate within a “few months” after interest rate hikes by the Bank of England.
The Chancellor said in Parliament on Wednesday that the Office for Budget Responsibility (OBR) has estimated that the UK gross domestic product (GDP) will grow 0.8% this year.
Our latest forecasts for the economy and public finances will be published later this afternoon after the Chancellor’s #SpringBudget speech
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— Office for Budget Responsibility (@OBR_UK) March 6, 2024
In November, the official forecaster had previously predicted growth of 0.7%.
It comes after sluggish growth last year, when the economy grew by 0.1% after a recession in the second half of the year. It had been expected to grow by 0.6%.
The OBR also upgraded its growth forecast for next year, increasing it from 1.4% to 1.9%.
It kept its growth prediction the same for 2026 but slightly downgraded its 2027 forecast from 2% to 1.8%.
Jeremy Hunt also said the OBR had predicted that Government borrowing was set to fall below 3% of GDP in 2025/26, three years ahead of previous predictions.
