UK is in a recession: finance minister
London, Nov 17 (EFE). The United Kingdom is in a recession, the country’s finance minister said Thursday, as he announced a raft of measures including higher taxes and cuts on spending in an Autumn statement that sent the pound into a downturn.
According to the Chancellor of the Exchequer, the Office for Budget Responsibility expects inflation in the UK to hit an average of 9.1% this year and 7.4% in 2023.
“They (OBR) confirm that our actions today help inflation to fall sharply from the middle of next year. They also judge that the UK, like other countries, is now in recession,” he told lawmakers at the House of Commons.
The minister added that the country’s GDP would grow 4.2% in 2022, to then fall 1.4% in 2023 and rise 1.3% in 2024, 2.6% in 2025 and 2.7% the following year.
The OBR, which has linked the sharp increase in inflation to rising global energy prices, predicts the unemployment rate in the UK will go from 3.6% to 4.9% in 2024 before falling to 4.1% the following year.
Among the raft of measures Hunt announced was the intention to borrow 177 billion pounds ($209 billion) this fiscal year (from April to April), the equivalent to 7% of the UK’s GDP, while in 2024 the government expects to borrow 140 billion — 5.5% of GDP.
“As a result, underlying debt as a percentage of GDP starts to fall from a peak of 97.6% of GDP in 2025-26 to 97.3% in 2027-28,” Hunt said.
In his long-awaited parliamentary statement, Hunt said that the government’s priorities were stability, growth and public services.
“We also protect the vulnerable because to be British is to be compassionate and this is a compassionate Conservative government,” he said.
As markets digested the tax hikes and tighter public spending the pound sterling lost value against the US dollar and the euro.
In the foreign exchange market, which was quick to react to the announcement, the pound fell 0.48% against the dollar, trading at $1.1856, and also lost value against the euro, yielding 0.06%, and settling at 1.1455 euros.
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