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The Office for Budget Responsibility (OBR), which oversees the UK’s public accounts, estimates that the country has entered recession and that UK inflation will stand at 9.1% this year, UK Finance Minister Jeremy Hunt announced Thursday.
In a statement in the House of Commons to present the Conservative government’s fiscal plan, Hunt said the OBR expects inflation to stand at 7.4% in 2023.
The minister noted that the country’s gross domestic product (GDP) will grow by 4.2 % in 2022, then fall by 1.4 % in 2023, and rise by 1.3 % in 2024, 2.6 % in 2025, and 2.7 % the following year.
The OBR, which has linked the sharp rise in inflation to rising global energy prices, estimates that the UK unemployment rate will rise from the current 3.6% to 4.9% in 2024 before falling to 4.1% the following year.
The UK will be indebted this fiscal year (April to April) by 177 billion pounds (201.78 billion euros), equivalent to 7% of UK GDP, while in 2024 it expects to be indebted by 140 billion pounds (159.6 billion euros) – 5.5% of GDP.
The UK’s cumulative debt will decline from 97.6% in FY2025-26 to 97.3% in 2027-2028.
In his much-anticipated parliamentary statement, Hunt said the Executive has three key pillars to tackle the economic crisis: financial stability, growth, and the defense of public services, while being determined to protect the most vulnerable groups, including pensioners.
Inflation, he added, is the “enemy” of stability and insisted that it hurts lower-income groups and can provoke social outbursts.
Hunt pointed out that the UK is not the only country facing problems due to the sharp rise in inflation, with Germany and Italy also experiencing similar problems.