Justin had the main points on Chancellor Hunt’s update:
Also from the UK on Thursday was the government’s Office for Budget Responsibility (OBR) update. Its makes for dour reading indeed.
Full text can be found from this summary here:
- Overview of the November 2022 Economic and fiscal outlook
- In the UK, CPI inflation is set to peak at a 40-year high of 11 per cent in the current quarter, and the peak would have been a further 2½ percentage points higher without the energy price guarantee (EPG) limiting a typical household’s annualised energy bill to £2,500 this winter and £3,000 next winter. Rising prices erode real wages and reduce living standards by 7 per cent in total over the two financial years to 2023-24 (wiping out the previous eight years’ growth), despite over £100 billion of additional government support. The squeeze on real incomes, rise in interest rates, and fall in house prices all weigh on consumption and investment, tipping the economy into a recession lasting just over a year from the third quarter of 2022, with a peak-to-trough fall in GDP of 2 per cent. Unemployment rises by 505,000 from 3.5 per cent to peak at 4.9 per cent in the third quarter of 2024.
Underlining is mine.
This is a graph from the report … the scale over on the left is a bit naughty (a chart crime some would call it) but nevertheless, the plunge is shocking.