What the UK's autumn statement really means for Britain - in charts

Five charts show how the country is struggling to recover from the pandemic and war in Ukraine

A market trader arranges eggs on his stall in Bolton Market. The UK Chancellor of the Exchequer Jeremy Hunt announced a plan to cut billions in government spending, raise billions more in taxes, while also promising to increase benefits for the poorest. Getty Images
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Jeremy Hunt's autumn statement has done little to remove the economic gloom surrounding the UK.

After the Chancellor's announcement, the Office for Budget Responsibility delivered a sobering analysis of Britain's finances, warning of a two-year recession and living standards dropping by a rate not seen in decades.

These charts show what the latest budget really means for the UK as it faces some grim economic milestones.

GDP

Britain's gross domestic product took a massive hit after the coronavirus pandemic and, after a short recovery, will continue to fall this year and next.

The OBR has forecast that as energy prices and inflation drop, and short-term interest rates fall back from their peaks, annual GDP growth will pick up to 1.3 per cent in 2024.

But most recent predictions at the OBR show that productivity may not reach the pre-pandemic trajectory until 2027.

Household incomes taking historic hit

The sharp rise in the cost of living means real household disposable income for each person is forecast to drop by 4.3 per cent in 2022-2023, the largest fall in a single financial year since comparable records began in 1956-1957.

This is to be followed by a further drop of 2.8 per cent in 2023-2024, the OBR says.

It would be only the third time in modern history that the UK has had back-to-back falls in living standards.

The previous two occasions were in 2010-2011 and 2011-2012, and in 1975-1976 and 1976-1977.

Taken together, the 7.1 per cent cumulative fall across 2022-2023 and 2023-2024 is large enough to wipe out the past eight years of growth and would see disposable income back to the level it was in 2013-2014.

Highest tax burden since the start of the Second World War

After the Government’s spring financial statement in March 2022, the OBR forecast the overall tax burden in the UK would rise to the equivalent of 36.3 per cent of GDP (gross domestic product, or the total value of the economy) by 2025-2026.

This would have been the highest level since 1949-1950.

The new forecast sees the tax burden peaking even higher, at 37.5 per cent of GDP in 2024-2025.

This is the highest level since the end of the Second World War.

From there, it is forecast to fall gradually to 37.1 per cent of GDP by 2027-2028, but remains 4.1 percentage points above its pre-pandemic level, and at its highest sustained level for seven decades.

Surging inflation

The UK’s annual rate of inflation is forecast to peak at 11.1 per cent before beginning to fall.

This represents the highest rate since 1981, when the rate stood at 11.8 per cent and the country was two years in to the first Conservative government of Margaret Thatcher.

At the Budget in October last year, inflation for 2022 was forecast to be four per cent.

The sharp jump in the forecast, to more than double this figure, reflects how quickly the cost-of-living crisis has escalated and how the state of the economy has declined.

Pound regains ground - but still struggling

The pound has dropped sharply against the US dollar as financial markets fretted over warnings the UK is already in recession and fears the austerity budget will compound the economic woes.

Sterling dropped more than 1.2 per cent to $1.177 and was 0.5 per cent lower at €1.14 after the gloomy forecasts from the OBR, and Mr Hunt’s £55 billion of tax rises and spending cuts.

The pound hit a record low in September of $1.03 after the mini-budget market meltdown caused by the economic policies of former prime minister Liz Truss and former chancellor Kwasi Kwarteng.

The currency has since regained its poise, but sterling has still lost about 12 per cent over the past year.

Updated: November 18, 2022, 9:33 AM
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