Autumn statement 2022 live: OBR says living standards to fall 7% as Hunt confirms millions to pay more taxes

The UK national debt is on track to be £400bn higher than forecast in March, the OBR says.

The OBR predict that the UK’s recession will last about a year, with GDP falling about 2%.

That’s a relatively shallow recession, and shorter than the Bank of England warned of this month.

But it’s dire enough – and it will mean that the UK economy will not reach its pre-pandemic size until 2024.

That means an entire parliament of lost growth.

In comparison, the US economy reached its pre-pandemic size last summer.

Other G7 nations are also larger than before the pandemic – although some also face the risk of recession

As Hunt sat down, the Office for Budget Responsibility released its latest economic and fiscal outlook.

It’s grim.

The OBR says that despite the new support with energy bills, living standards are going to fall by 7% over the next two years.

That’s a dire outcome, wiping out eight years of growth.

The OBR says:

Over £100bn of additional fiscal support over the next two years cushions the blow of higher energy prices – but the economy still falls into recession and living standards fall 7% over two years, wiping out eight years’ growth.

Over the medium term, around £40bn in tax rises and spending cuts – in roughly equal measure – offsets higher debt interest and welfare costs and gets debt falling as a share of GDP.

The fall in living standards next year will be the biggest on record, so since at least the mid-1950s, the OBR adds:

On a fiscal year basis, RHDI per person (a measure of living standards) falls by 4.3% in 2022-23, which would be the largest since ONS records began in 1956-57.

That is followed by the second largest fall in 2023-24 at 2.8%.

This would be only the third time since 1956-57 that RHDI per person has fallen for two consecutive fiscal years – the last time this happened was in the aftermath of the global financial crisis.

This chart shows the scale of the hit to living standards, as inflation hammers households.

Hunt ends by confirming that benefits and pensions will rise in line with inflation.

Benefits will go up in line with the inflation rate in September, 10.1%, he says. He says this will cost £11bn, but an average family on universal credit will gain by £600, he says.

Mr Speaker, there have also been some representations to keep the uplift to working age and disability benefits below the level of inflation given the financial constraints we face, but that would not be consistent with our commitments to protect the most vulnerable. So today I also commit to upgrade such benefits by inflation with an increase of 10.1%.

And pensions, and pension credit, will also rise by 10.1%, he says. The triple lock is being protected, he says.

He ends by saying:

This is a balanced plan for stability, a plan for growth and a plan for public services.

It shows that you don’t need to choose either a strong economy or good public services.

With Conservatives, and only with Conservatives, you get both.

Hunt says he is accepting a recommendation from the Low Pay Commission and increasing the national living wage by 9.7% next year.

That means from April 23, the hourly rate will be £10.42 which represents an annual pay rise worth over £1,600 pounds to a full time worker.

Hunt says rent increases in the social rented sector will be capped at 7%.

Hunt says compassion is a great British value as he turns to the final section of his speech.

On energy bills, he says the energy price guarantee will be extended for 12 months from April. Unit prices will be capped, and the average household will pay £3,000, he says.

He says there will also be further payments for help with energy bills for pensioners, for poorer households and for disabled people.

Hunt turns to growth. As Labour MPs jeer, he claims they have never been interested in growth.

Energy is part of the growth plan, he says, and he says there will be an acceleration of efforts to make the UK energy independent.

He says the government will go ahead with building a new nuclear power plant, Sizewell C.

Hunt says he is increasing the NHS budget in the next two years by £3.3bn.

He says Amanda Pritchard, the NHS England chief executive, says this will allow the NHS to fulfil its key priorities.

And he says the devolved governments will get funding too.

The new 45% windfall tax on energy generators is higher than the 40% that had been expected.

Shares in SSE, which runs gas-fired power stations alongside hydroelectric plants and windfarms, have dropped by 3.75% (yesterday, SSE reported a tripling of profits thanks to the energy crisis)

Centrica shares have dropped by 1.1%, while Drax – which runs a large biomass power station in North Yorkshire – are down 3.9%.