Budget 2023: UK economy will avoid recession in 2023 and inflation set to plummet, says chancellor

Published

3 years ago

March 15, 2023

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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.”

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?”

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.

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.

Business

Blackrock arm in talks to back Six Nations Rugby investor

Published

7 hours ago

December 14, 2025

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Blackrock arm in talks to back Six Nations Rugby investor

A division of Blackrock, the world’s biggest asset manager, is in talks to provide hundreds of millions of pounds of funding to a company which owns stakes in Six Nations Rugby and the women’s professional tennis tour.

Sky News has learnt that HPS, the global private credit giant, is among the parties negotiating with CVC Capital Partners over the financing of its Global Sports Group (GSG) holding company.

The talks, which are not exclusive, would see HPS help provide firepower for the CVC-backed vehicle to make further acquisitions to expand its portfolio.

Chaired by Marc Allera, the former BT Group consumer boss, GSG holds stakes in Premiership Rugby, the top flights of French and Spanish football and the international volleyball tour.

In recent weeks, Mr Allera has outlined his ambitions to acquire further global sports properties.

HPS, which was acquired by Blackrock for $12bn late last year, is said to be serious about becoming involved in GSG.

Other parties with whom CVC is in discussions include Ares Management, which is interested in providing both debt and equity to GSG, according to insiders.

Any new financing package was expected to be secured on favourable terms for the CVC-controlled group because of the underlying credit quality of the assets in the portfolio.

Sky News revealed during the summer that CVC had engaged a trio of banks to explore plans for a refinancing of what was at the time referred to internally as SportsCo and which has since been renamed Global Sport Group.

The portfolio also includes an Indian Premier League cricket franchise, several of which are currently exploring sales at valuations of well over $1bn.

Goldman Sachs, PJT Partners and Raine Group are advising on the refinancing of GSG, which has been set up to optimise CVC’s investments in the sector.

The deal is expected to allow CVC to remain invested in its sports portfolio for longer, while also paving the way for the sale of a minority stake in SportsCo or a future initial public offering.

Having made billions of dollars from its ownership of Formula One motor racing – one of the most lucrative deals in the history of sport – CVC has bought stakes in leagues and other assets spanning a spectrum of elite sporting assets over the last two decades.

Its investment in the media rights to La Liga – Spain’s equivalent of the Premier League – is expected to generate a handsome return for the firm, although a comparable deal in France has faced significant challenges amid broadcasters’ financial challenges in the country.

CVC’s backing of global sports properties is intended to position it to maximise their commercial potential through new media and sponsorship rights deals, as well as their expansion into new formats aimed at drawing wider audiences amid rapid shifts in media consumption.

In rugby union, its acquisition of a stake in Premiership Rugby’s commercial rights was hit by the pandemic and the subsequent financial pressures on clubs which saw a number of the league’s teams forced into insolvency.

CVC, which bought into Premiership Rugby in 2019, owns a 27% stake in the league.

Its sporting assets will continue to remain autonomous and independent of one another, despite the new umbrella holding entity.

One expected benefit of the SportsCo approach would be the sourcing of new investment opportunities, with CVC being linked to a bid for one of the new European NBA basketball franchises which is expected to be sold in the coming months.

Global sports properties have become one of the hottest growth areas for private capital in recent years, with firms such as Ares, Silver Lake Partners and Bridgepoint all investing substantial sums in teams, leagues and other assets across the industry.

CVC and Blackrock declined to comment.

Business

Next plots swoop on family-owned shoe chain Russell & Bromley

Published

1 day ago

December 13, 2025

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Next plots swoop on family-owned shoe chain Russell & Bromley

Next, the high street fashion giant, is plotting a swoop on Russell & Bromley, the 145 year-old shoe retailer.

Sky News has learnt that Next, which has a market capitalisation of £16.6bn, is among the parties in talks with Russell & Bromley’s advisers about a deal.

City sources said this weekend that a number of other suitors were also in the frame to make an investment in the chain, although their identities were unclear.

The talks come amid the peak Christmas trading period, with retail bosses hopeful that consumer confidence holds up over the coming weeks despite the stuttering economy.

Russell & Bromley confirmed several weeks ago that it had drafted in Interpath, the advisory firm, to explore options for raising new financing for the business.

The chain trades from 37 stores and employs more than 450 people.

It was formed in 1880 when the first Russell & Bromley store opened in Eastbourne.

Seven years earlier, George Bromley and Elizabeth Russell, both of whom hailed from shoemaking families, were married, paving the way for the establishment of the business.

Russell & Bromley is now run by Andrew Bromley, the fifth generation of his family to hold the reins.

Billie Piper, the actress and singer, is the current face of the brand as it tries to appeal to younger consumers as part of a five-year turnaround plan.

If it materialised, an acquisition or investment by Next would mark the latest in a string of brand deals struck by Britain’s most successful London-listed fashion retailer.

In recent years, it has bought brands such as Cath Kidston, Joules and Seraphine, the maternitywear retailer for knockdown prices.

Next also owns Made.com, the online furniture retailer, and FatFace, the high street fashion brand.

Under Lord Wolfson, its veteran chief executive, Next has defied the wider high street gloom to become one of the UK’s best-run businesses.

Its Total Platform infrastructure solution has enabled it to plug in other retail brands in order to provide logistics, e-commerce and digital service capabilities.

Both Victoria’s Secret and Gap also have partnerships with Next using the Total Platform offering.

It was unclear whether any deal between Next and Russell & Bromley would involve acquiring the latter’s brand outright or making an investment into the business.

This weekend, Next declined to comment, while neither Russell & Bromley nor Interpath could be reached for comment.

In a statement in October, Mr Bromley said: “We are currently exploring opportunities to help take Russell & Bromley into the next phase of our ‘Re Boot’ vision.

“Since the announcement of the ‘Re Boot’ earlier this year we have made significant progress, positioning us well to build on our momentum and continue along our journey.

“We are looking forward to working with our advisory team to secure the necessary investment to accelerate our expansion plans.”

Business

UK economy shrank by 0.1% in October, official figures show

Published

3 days ago

December 12, 2025

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UK economy shrank by 0.1% in October, official figures show

The UK economy contracted by 0.1% in October, according to official figures.

The surprise fall in gross domestic product (GDP) – a measure of economic output – comes after a similar unexpected 0.1% drop in September and 0% growth in August.

Economists polled by the Reuters news agency had predicted that October GDP would grow by 0.1%.

The figures, from the Office for National Statistics (ONS), represent more bad news for the chancellor over the state of the UK economy.

Commentators had warned that consumer spending was likely to be restrained in the run-up to November’s budget, amid concerns about the impact of Rachel Reeves’s potential measures on households and businesses.

UK GDP has also been hit hard by disruption to car production caused by a cyber attack on Jaguar Land Rover.

The ONS said that during October, the UK’s services sector fell by 0.3%, while construction was down 0.6%. However, production grew by 1.1%.

It found that GDP on a rolling three-month basis, to October, also fell by 0.1%.

The ONS’s director of economic statistics, Liz McKeown, said: “Within production, there was continued weakness in car manufacturing, with the industry only making a slight recovery in October from the substantial fall in output seen in the previous month.

“Overall services showed no growth in the latest three months, continuing the recent trend of slowing in this sector. There were falls in wholesale and scientific research, offset by growth in rental and leasing and retail.”

Interest rate cut ‘nailed on’

Commentators also blamed rumours and leaks in the run-up to the budget for dampening demand.

Scott Gardner, from banking giant JP Morgan, said that despite expectations of a return to growth, the economy continued to “battle a period of inconsistent productivity”.

He added: “Speculation about potential budget announcements had a numbing effect on consumers and businesses in the lead up to the chancellor’s speech at the end of November.”

Suren Thiru, from the Institute of Chartered Accountants, said the data increased the likelihood of the Bank of England cutting interest rates next week.

He said: “With these downbeat figures likely to further fuel fears among rate-setters over the health of the UK economy, a December policy loosening looks nailed on, particularly given the likely deflationary impact of the budget.”

Figures ‘extremely concerning’

Barret Kupelian, chief economist at PwC, said that while some of the blame could be attributed to the Jaguar Land Rover cyber attack, “the bigger story is that speculation around the autumn budget kept households and businesses in wait-and-see mode”.

He added: “Given the timing of the budget, November’s GDP print is likely to look similarly subdued before any post-budget effects start to show up.”

Sir Mel Stride, the Tory shadow chancellor, described the figures as “extremely concerning”, claiming they were “a direct result of Labour’s economic mismanagement”.

A Treasury spokesperson said: “We are determined to defy the forecasts on growth and create good jobs, so everyone is better off, while also helping us invest in better public services.”