In his Spring Statement speech, Chancellor Rishi Sunak responded to the latest forecasts as published by the Office for Budget Responsibility (OBR).
The OBR forecasts UK economic growth to be 3.8% in 2022, a significant cut from its previous prediction of 6.0%. The OBR then predicts the economy to grow by 1.8% in 2023 and 2.1% in 2024.
Meanwhile, borrowing is set to more than halve from its post-World War II high of £322 billion (15.0% of GDP) in 2020/21 to £128 billion (5.4% of GDP) in 2021/22.
Borrowing is then predicted to be £16 billion higher in 2022/23 than previously forecast in October.
In its latest forecast, the OBR said that Russia's invasion of Ukraine has had 'major repercussions for the global economy', which has already been severely impacted by the coronavirus (COVID-19) pandemic and rising inflation.
The significant rise in gas and oil prices since the start of the conflict will 'weigh heavily on a UK economy that has only just recovered its pre-pandemic level', the OBR said.
In regard to rising levels of inflation, the public body said that real living standards are set to fall by 2.2% in 2022/23 and not recover to their pre-pandemic level until 2024/25.
Internet link: OBR website