Britain will avoid a recession this year, Jeremy Hunt has announced.
The chancellor said the government’s “plan is working” as he unveiled his first Budget.
He said that contrary to previous forecasts, the Office for Budget Responsibility now believed the UK economy will not shrink for two consecutive quarters in 2023 - the definition of a “technical recession”.
Hunt said: “The Office for Budget Responsibility forecast that because of changing international factors and the measures I take, the UK will not now enter a technical recession this year.
“They forecast we will meet the prime minister’s priorities to halve inflation, reduce debt and get the economy growing. We are following the plan and the plan is working.”
However, the OBR still said the economy will shrink overall this year, by 0.2%.
It is then forecast to grow by 1.8% in 2024; 2.5% in 2025; 2.1% in 2026; and 1.9% in 2027.
Hunt also confirmed a range of new policies which had already been announced, including en extension of the energy price guarantee, a freeze in fuel duty and a massive expansion in free childcare.
The one major surprise was his decision to abolish the upper limit at which people start paying extra tax on the size of their pension pots - effectively a tax break for the well-off.
“But instead they decided to continue papering over the cracks of 13 years of economic failure.
“The only surprise was a handout for the richest 1% and their pension pots.
“Growth was downgraded in this Tory Budget, but Labour will not allow us to keep bumping along this path of managed decline.
“With our mission to secure the highest sustained growth in the G7, we will create good jobs and productivity growth across every part of our country.
“Where the government has thrown in the towel, Labour will build a better Britain.”