UK Finance Minister, Jeremy Hunt, recently announced in his budget speech that the UK economy is set to avoid a recession in 2023. This prediction comes as a surprise, as previous forecasts by the Office for Budget Responsibility (OBR) predicted a 1.4% contraction in the economy for this year.
Despite the ongoing challenges posed by the COVID-19 pandemic, Hunt remains optimistic about the future of the UK economy. In this article, we explore the factors contributing to this prediction and measures being taken to speed up economic growth.
Factors Contributing to the Prediction
One of the key factors contributing to this prediction is the decrease in energy costs. Energy costs had surged after Russia’s invasion of Ukraine in 2022, leading to concerns about the impact on the UK economy. However, energy costs have since come down, providing some relief to businesses and consumers.
In addition, there have been signs of a recovery in some economic data, which further supports the prediction. For instance, the services sector – which accounts for the largest share of the UK economy – has shown signs of growth, with the Markit/CIPS UK Services PMI rising to 62.8 in February 2023, up from 57.7 in January.
Measures to Speed up Economic Growth
Despite the positive outlook, Hunt acknowledges that there is still work to be done to ensure a sustainable recovery. To this end, he announced measures to speed up economic growth, including:
Investing in Infrastructure: The government plans to invest £27 billion in infrastructure projects, such as roads, railways, and broadband, over the next three years. This is expected to create jobs and boost economic activity.
Supporting Small Businesses: The government will provide support for small businesses through measures such as reducing business rates and increasing access to finance.
Encouraging Innovation: The government will invest in research and development to encourage innovation and help businesses develop new technologies and products.
Investing in Skills: The government will invest in skills training and education to ensure that workers have the skills they need to succeed in the changing job market.
Overall, Hunt’s prediction that the UK economy will avoid a recession in 2023 is welcome news for businesses and consumers alike. While there are still challenges to overcome, the decrease in energy costs and signs of recovery in some economic data provide reasons for optimism. The measures announced in the budget speech to speed up economic growth are also promising and will help ensure a sustainable recovery.