Britain’s economic growth rate could come close to US levels, the Chancellor has predicted ahead of the publication of the latest inflation figures.
In an upbeat assessment of the economy, Jeremy Hunt said it was ‘absolutely possible’ the UK could grow faster than Europe.
US GDP grew by 3.2 per cent in the last quarter of 2023, figures show, while the UK economy shrank by 0.3 per cent. Eurozone economic growth was flat in the same period.
The US economy defied recession fears, helped by an increase in interest rates to tame inflation and a tight labour market which has kept wages high.
Appearing before peers on the Economic Affairs Committee yesterday, Mr Hunt spoke of efforts to raise productivity in the public and private sectors.
Jeremy Hunt speaks to Rishi Sunak after presenting the annual budget statement in the House of Commons on March 6
Rishi Sunak and Jeremy Hunt pause during a visit to a builders warehouse in London on March 6
He said: ‘If you look at our policies to increase investment by the private sector with the full expensing tax break that we announced, if you look at our nurturing of the technology sector which I think is going to be a great opportunity for the UK going forward.
‘It’s absolutely possible to get our economic growth rate healthily closer to US levels of growth compared to continental European levels of growth.’
The Chancellor also said he did not believe the increases in the tax burden should be ‘irreversible’.
His comments come as inflation is expected to have fallen to a fresh low of nearly two and a half years today when official data for February is released.
Most economists expect the figures from the Office for National Statistics (ONS) to show inflation fell to 3.5 per cent in February – down from 4 per cent in January and the lowest since September 2021, when it was 3.1 per cent.
It comes ahead of the Bank of England’s latest interest rate decision tomorrow, with policymakers are expected to hold rates at 5.25 per cent.
But another steep fall in the Consumer Prices Index may reinforce expectations the Bank is moving closer to cutting rates later this year.
Writing in today’s Daily Mail – four years on to the day from the introduction of the furlough scheme – the Prime Minister says the economy is ‘showing strong signs of recovery’.
Rishi Sunak says the scheme ‘successfully saved thousands of businesses from going under and millions of jobs from being lost’, and now ‘we have well and truly turned a corner’.
‘Furlough protected jobs and thanks to our success in bringing stability to the economy, controlling inflation and gripping spending, we are well and truly on the path to sustainably lower taxes.
‘We started that journey in the autumn with a 2p cut to National Insurance worth £450 for the average worker on £35,400 a year. And the Chancellor cut taxes again in this month’s budget which now means that 27million employees will get an average tax cut of around £900 a year.’