UK Economy Outlook: OBR Charts Show Energy Price Shock Hits Growth and Living Standards

The Office for Budget Responsibility (OBR) has released new analysis showing how soaring energy prices are set to ripple through the UK economy. The independent fiscal watchdog warns that higher gas and electricity costs will push up inflation, squeeze household incomes, and drag down GDP growth. The impact is broad-based, affecting everything from consumer spending to business investment. The OBR's latest charts illustrate a sharp deterioration in the economic outlook compared with its previous forecast, with real household disposable income per person falling at the fastest annual rate since records began in the 1950s. While the government has announced support packages to cushion the blow, the OBR notes that these measures only partially offset the hit to living standards. The energy shock also complicates the Bank of England's task, as it must balance fighting inflation with avoiding a deeper recession. Looking ahead, the OBR expects the economy to contract in 2023 before a slow recovery, but the path remains highly uncertain given volatile global energy markets and geopolitical risks.