The credit rating firm also revised its forecast for real GDP growth to 3.3% from 3% in 2022, but lowered its forecast for 2023 to 0.3% from 0.9%, and it does not s expect growth to return to its potential level before 2026.
He described the government’s energy price cap as something that would directly reduce short-term inflationary pressures. However, he expects real disposable incomes to decline this year due to inflation – which he predicts will peak at nearly 11% in the coming months, remaining above the 2% mark. Bank of England until 2025.
It follows a rare intervention by the International Monetary Fund (IMF), in which it called on the government to reverse its decision to abolish the maximum rate of income tax. The Washington-based UN agency said the mini-budget risked undermining the Bank of England’s efforts to tackle runaway inflation.
It comes just days after Chancellor Kwasi Kwarteng’s mini budget, in which he announced the government would cut the basic rate of income tax by 1 pence from April 2023, reversed the planned hike corporate tax and reversed the 1.25 percentage point increase in national insurance. contributions.
On the back of this, the UK economy saw a sharp fall in the pound’s exchange rate against the US dollar – with the pound sterling falling to its lowest value in 50 years.