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Jeremy Hunt said the British economy is “proving the doubters wrong” and will avoid recession, as he delivered his first full budget speech to Parliament.

The chancellor said the government’s plan for the economy was “working” as he announced what he called a “budget for growth”.

He said forecasts from the Office for Budget Responsibility (OBR) showed the UK would avoid recession – two-quarters of negative growth – in 2023, despite previous predictions.

But the economy will still contract overall this year by 0.2%, and the OBR has warned living standards are still expected to fall by the largest amount since records began – although the decline is not as bad as had been forecast in November.

Budget 2023 – read more:
Politics live: The budget as it happened and reaction

The key points of the budget at a glance

The OBR forecasts also said inflation in the UK would fall from 10.7% in the final quarter of last year to 2.9% by the end of 2023.

Mr Hunt said it showed Rishi Sunak’s goal of halving inflation this year would be met, but he added: “We remain vigilant and will not hesitate to take whatever steps are necessary for economic stability”.

However, Labour leader Sir Keir Starmer said the chancellor’s “boasts” about lower inflation were “ridiculous”, adding: “The idea that it’s a tax cut, British people can see through that.

“They see their tax burden at its highest level for 70 years and they know it’s not the government that’s lowering inflation.

“It’s working people, earning less, enjoying less. It’s their sacrifice that is helping to bring inflation down and they deserve better than another cheap trick from the government of gimmicks, making them pay whilst trying to claim the credit.”

Interest Rate Expectations
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Interest Rate Expectations

A number of other plans were unveiled by Mr Hunt, including:

• Bringing charges for prepayment meters in line with direct debit charges, impacting over four million households and saving them an average of £45 per year

• Making duty on draught products in pubs up to 11p lower than supermarkets

• Maintaining the freeze in fuel duty

The chancellor also said £11bn will be added to the defence budget over the next five years – following an announcement earlier this week – saying it would be nearly 2.25% of GDP by 2025. The government’s ambition is for it to reach 2.5%, he added.

And after reports he would increase the pensions lifetime allowance to £1.8m in an attempt to encourage doctors and other high earners back to work, Mr Hunt decided to scrap the limit entirely, as well as increasing the pensions annual tax-free allowance from £40,000 to £60,000.

He told the Commons: “In the face of enormous challenges I report today on a British economy which is proving the doubters wrong.

“In the autumn we took difficult decisions to deliver stability and sound money. Since mid-October, 10-year gilt rates have fallen, debt servicing costs are down, mortgage rates are lower and inflation has peaked.

“The International Monetary Fund says our approach means the UK economy is on the right track.”

But Sir Keir said the only permanent tax cut in the budget was for “the richest 1%”, adding: “How can that possibly be a priority for this government?”

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‘This a failure you can measure not just in the figures but in the empty pockets of working people,’ says the Labour leader.

The Labour leader continued: “Again we see a failure to grip the long-term challenges. No determination to create growth that unlocks the potential of the many – working people being made to pay for Tory choices and Tory mistakes.”

Some policies were revealed ahead of the chancellor’s speech, including keeping the cap on energy prices at £2,500 for a further three months, despite a planned rise to £3,000 in April, and 12 new investment zones.

Sky News also reported last night his promise to provide 30 hours of childcare a week to parents of one and two-year-olds, and to give a further cash injection to the sector to increase the availability of existing free childcare for three to four-year-olds.

But Mr Hunt went further on this measure, saying the care would be available from September 2024 when a child reaches nine months, as well as promising to increase funding for nurseries and pay those on Universal Credit upfront for the childcare they need to get.

However, he also confirmed the ratio for how many children each staff member looks after can be raised from one per four to one per five – though he said it was optional for both providers and parents.

There were more announcements to fit with Mr Hunt’s “three E’s” philosophy – enterprise, employment and education.

They included:

• Incentive payments of up to £1,200 for childminders who sign up to the profession

• Enhanced credit for small and medium businesses, and creative firms

• An extension to relief for theatres, orchestras and museums

• Tax relief on energy efficient measures in firms

• £900m investment into supercomputing

The chancellor also confirmed widely reported plans to abolish the Work Capability Assessment for disabled people to “separate benefit entitlement from an individual’s ability to work”.

Mr Hunt promised a new programme called Universal Support, describing it as “a new, voluntary employment scheme for disabled people where the government will spend up to £4,000 per person to help them find appropriate jobs and put in place the support they need”.

And he said there would be a £400m fund to help those who are forced to leave work because of a health condition to get support in the workplace.

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Chancellor Jeremy Hunt MP has announced that the energy price guarantee will remain at £2,500 until the end of June.

Mr Hunt confirmed he would keep the incoming rise in corporation tax – from 19% to 25% – despite anger from some of his own backbenchers.

But in a bid to keep businesses happy, he introduced a new benefit where every pound a company invests in equipment can be deducted in full and immediately from taxable profits – “a corporation tax cut worth an average of £9bn a year for every year it is in place”.

In what appeared to echo recent Labour policy, the chancellor announced continued state-financed investment in nuclear power and the launch of Great British Nuclear, saying the public body will “bring down costs and provide opportunities across the nuclear supply chain to help provide up to one quarter of our electricity by 2050”.

And he said nuclear energy would be reclassified as “environmentally sustainable” to give it the same access to investment incentives as renewables.

Today’s statement was Mr Hunt’s first full budget as chancellor – having been brought in by Liz Truss to reverse a number of measures from her disastrous mini-budget last October and kept on by Rishi Sunak after he took over as prime minister.

It came against a backdrop of mass industrial action, with hundreds of thousands of workers today staging what is believed to be the biggest walkout since the current wave of unrest began.

Teachers, university lecturers, civil servants, junior doctors, London Underground drivers and BBC journalists are among those taking to picket lines around the country amid widespread anger over pay, job security, pensions and conditions.

Labour’s shadow chancellor, Rachel Reeves, said ahead of the budget that it was “an opportunity for the government to get us off their path of managed decline”.

She added, if her party were in power, their focus would be on securing the highest growth in the G7.

“Our plan will help us lead the pack again, by creating good jobs and productivity growth across every part of our country, so everyone, not just a few, feel better off,” she added.

Our politics, business and finance reporters will be hosting a Q&A after the budget statement. To submit a question, click here.

Have your say on the budget with Sky News

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‘The future is in our hands’ scientists say, as 2024 becomes first year to pass 1.5C global warming threshold

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'The future is in our hands' scientists say, as 2024 becomes first year to pass 1.5C global warming threshold

Last year was the warmest on record, the first to breach a symbolic threshold, and brought with it deadly impacts like flooding and drought, scientists have said.

Two new datasets found 2024 was the first calendar year when average global temperatures exceeded 1.5C above pre-industrial levels – before humans started burning fossil fuels at scale.

The record heat has not only has real-world implications, as it contributed to deadly flooding in Spain and vicious drought in places like Zambia in southern Africa.

It is also highly symbolic.

Countries agreed in the landmark Paris Agreement to limit warming ideally to 1.5C, because after that the impacts would be much more dangerous.

The news arrives as California battles “hell on earth” wildfires, suspected to have been exacerbated by climate change.

And it comes as experts warn support for the Paris goals is “more fragile than ever” – with Donald Trump and the Argentinian president poised to row back on climate action.

More on Climate Change

What caused 2024 record heat – and is it here to stay?

Friends of the Earth called today’s findings from both the EU’s Copernicus Climate Change service and the Met Office “deeply disturbing”.

The “primary driver” of heat in the last two years was climate change from human activity, but the temporary El Nino weather phenomenon also contributed, they said.

The breach in 2024 does not mean the world has forever passed 1.5C of warming – as that would only be declared after several years of doing so, and warming may slightly ease this year as El Nino has faded.

But the world is “teetering on the edge” of doing so, Copernicus said.

Prof Piers Forster, chair of the UK’s Climate Change Committee, called it a “foretaste of life at 1.5C”.

Dr Gabriel Pollen, Zambia’s national coordinator for disasters, said “no area of life and the economy is untouched” by the country’s worst drought in more than 100 years.

Six million people face starvation, critical hydropower has plummeted, blackouts are frequent, industry is “decimated”, and growth has halved, he said.

Paris goal ‘not obsolete’

Scientists were at pains to point out it is not too late to curb worse climate change, urging leaders to maintain and step up climate action.

Professor Forster said temporarily breaching 1.5C “does not mean the goal is obsolete”, but that we should “double down” on slashing greenhouse gas emissions and on adapting to a hotter world.

The Met Office said “every fraction of a degree” still makes a difference to the severity of extreme weather.

Firefighters battle the Palisades fire as it burns during a windstorm on the west side of Los Angeles.
Pic: Reuters
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The California fires were whipped up by strong, dry winds and likely worsened by climate change. Pic: Reuters

Copernicus director Carlo Buontempo added: “The future is in our hands: swift and decisive action can still alter the trajectory of our future climate”.

Climate action is ‘economic opportunity’

Copernicus found that global temperatures in 2024 averaged 15.10°C, the hottest in records going back to 1850, making it 1.60°C above the pre-industrial level during 1850-1900.

The Met Office’s data found 2024 was 1.53C above pre-industrial levels.

The figures are global averages, which smooth out extremes from around the world into one number. That is why it still might have felt cold in some parts of the world last year.

Greenpeace campaigner Philip Evans said as “the world’s most powerful climate denier” Donald Trump returns to the White House, others must “take up the mantle of global climate leadership”.

The UK’s climate minister Kerry McCarthy said the UK has been working with other countries to cut global emissions, as well as greening the economy at home.

“Not only is this crucial for our planet, it is the economic opportunity of the 21st century… tackling the climate crisis while creating new jobs, delivering energy security and attracting new investment into the UK.”

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Picture shows baby girl moments after birth on packed migrant dinghy heading for Canary Islands

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Picture shows baby girl moments after birth on packed migrant dinghy heading for Canary Islands

Photographs have captured the moments after a baby girl was born on a packed migrant dinghy heading for the Canary Islands.

The small boat was carrying 60 people and had embarked from Tan-Tan – a Moroccan province 135 nautical miles (250km) away.

One image shows the baby lying on her mother’s lap as other passengers help the pair.

The boat’s passengers – a total of 60 people, including 14 women and four children – were rescued by a Spanish coastguard ship.

Coastguard captain Domingo Trujillo said: “The baby was crying, which indicated to us that it was alive and there were no problems, and we asked the woman’s permission to undress her and clean her.

“The umbilical cord had already been cut by one of her fellow passengers. The only thing we did was to check the child, give her to her mother and wrap them up for the trip.”

Pic: Salvmento Maritimo/Reuters

Spanish coast guards wearing white suits work on a rescue operation as they tow a rubber boat carrying migrants, including a newborn baby, off the island off the Canary Island of Lanzarote, in Spain, in this handout picture obtained on January 8, 2025. SALVAMENTO MARITIMO/Handout via REUTERS THIS IMAGE HAS BEEN SUPPLIED BY A THIRD PARTY. NO RESALES. NO ARCHIVES. MANDATORY CREDIT
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Coastguards rescued all 60 people aboard the boat. Pic: Salvmento Maritimo/Reuters


The mother and baby were taken for medical checks and treated with antibiotics, medical authorities said.

Dr Maria Sabalich, an emergency coordinator of the Molina Orosa University Hospital in Lanzarote, said: “They are still in the hospital, but they are doing well.”

When they are discharged from hospital, the pair will be moved to a humanitarian centre for migrants, a government official said.

They will then most likely be relocated to a reception centre for mothers and children on another of the Canary Islands, they added.

Thousands of migrants board boats attempting to make the perilous journey from the African coast to the Spanish Canaries each year.

Read more from Sky News:
Why have California fires spread so quickly?
Ryanair sues passenger
US presidents gather at Carter funeral

In 2024, a total of 9,757 people died on the route, according to Spanish migration charity Walking Borders.

Mr Trujillo said: “Almost every night we leave at dawn and arrive back late.

“This case is very positive, because it was with a newborn, but in all the services we do, even if we are tired, we know we are helping people in distress.”

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It’s not ‘traditional’ wildfire season – so why have the California fires spread so quickly?

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It's not 'traditional' wildfire season - so why have the California fires spread so quickly?

A real-life drama is unfolding just outside Hollywood. Ferocious wildfires have ballooned at an “alarming speed”, in just a matter of hours. Why?

What caused the California wildfires?

There are currently three wildfires torching southern California. The causes of all three are still being investigated.

The majority (85%) of all forest fires across the United States are started by humans, either deliberately or accidentally, according to the US Forest Service.

But there is a difference between what ignites a wildfire and what allows it to spread.

However these fires were sparked, other factors have fuelled them, making them spread quickly and leaving people less time to prepare or flee.

The main culprit so far is the Santa Ana winds.

Follow live: Malibu residents told to get ready to flee

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LA residents face ‘long and scary night ahead’

What are Santa Ana winds?

So-called Santa Ana winds are extreme, dry winds that are common in LA in colder winter months.

The California Department of Forestry and Fire Protection warned strong Santa Ana winds and low humidity are whipping up “extreme wildfire risks”.

Winds have already topped 60mph and could reach 100mph in mountains and foothills – including in areas that have barely had any rain for months.

It has been too windy to launch firefighting aircraft, further hampering efforts to tackle the blazes.

These north-easterly winds blow from the interior of Southern California towards the coast, picking up speed as they squeeze through mountain ranges that border the urban area around the coast.

They blow in the opposite direction to the normal onshore flow that carries moist air from the Pacific Ocean into the area.

The lack of humidity in the air parches vegetation, making it more flammable once a fire is started.

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Wildfires spread as state of emergency declared

The ‘atmospheric blow-dryer’ effect

The winds create an “atmospheric blow-dryer” effect that will “dry things out even further”, said Daniel Swain, a climate scientist at University of California, Los Angeles (UCLA).

The longer the extreme wind persists, the drier the vegetation will become, he said.

“So some of the strongest winds will be at the beginning of the event, but some of the driest vegetation will actually come at the end, and so the reality is that there’s going to be a very long period of high fire risk.”

What role has climate change played?

California governor Gavin Newsom said fire season has become “year-round in the state of California” despite the state not “traditionally” seeing fires at this time of year – apparently alluding to the impact of climate change.

Scientists will need time to assess the role of climate change in these fires, which could range from drying out the land to actually decreasing wind speeds.

But broadly we know that climate change is increasing the hot, dry weather in the US that parches vegetation, thereby creating the fuel for wildfires – that’s according to scientists at World Weather Attribution.

But human activities, such as forest management and ignition sources, are also important factors that dictate how a fire spreads, WWA said.

Read more:
Terrifying firestorm tears through home of film stars
State of emergency as wildfires sweep through LA celebrity suburb

A U.S flag flies as fire engulfs a structure while the Palisades Fire burns during a windstorm on the west side of Los Angeles, California.
Pic: Reuters
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Pic: Reuters

Southern California has experienced a particularly hot summer, followed by almost no rain during what should be the wet season, said Professor Alex Hall, also from UCLA.

“And all of this comes on the heels of two very rainy years, which means there is plenty of fuel for potential wildfires.

“These intense winds have the potential to turn a small spark into a conflagration that eats up thousands of acres with alarming speed – a dynamic that is only intensifying with the warmer temperatures of a changing climate.”

The flames from a fire that broke out yesterday evening near a nature reserve in the inland foothills northeast of LA spread so quickly that staff at a care home had to push residents in wheelchairs and hospital beds down the street to a car park.

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