The state pension will be increased by 10.1 percent and with inflation falling it is set to deliver a much-needed real-term rise in incomes for 13 million people. The national living wage and universal credit will also increase by 10.1 percent this spring, meaning a further seven million people will be better off in real terms.
A packed programme of Premier League and Championship football following the World Cup and the resolution of strikes will also help, economists predicted.
The King’s Coronation in May is also expected to bring a boost worth up to £1.2billion to tourism, hospitality and retail although the extra Bank Holiday will temper that effect.
The assessment came as official figures revealed yesterday that the UK had avoided a recession, but only just, in the last three months of 2022.
The Office for National Statistics recorded zero growth in gross domestic product in the fourth quarter.
Chancellor Jeremy Hunt said: “Our economy is more resilient than many feared.
“However, we are not out the woods yet, particularly when it comes to inflation.
“If we stick to our plan to halve inflation this year, we can be confident of having amongst the best prospects for growth of anywhere in Europe.”
Darren Morgan, ONS director of economic statistics, said: “The break in Premier League football for the World Cup and postal strikes caused a slowdown.
“There had been a 17 percent fall in sports activities and amusement and recreation activities because the Premier League suspended fixtures.”
He added that the reduction in GP appointments and operations during December, partly as a result of strikes, had contributed to a 4.2 percent fall in the human health activities industry.
Simon French, chief economist at investment bank Panmure Gordon, said: “Pension benefits, universal credit and the national living wage are all increased by 10.1 percent on the first of April.
“Gas prices have come down and we expect inflation to be sub -10 percent at that point.
“So that would be a real-terms pay increase for 20 million people: 13 million people on pensions, five million people on universal credit and two million people on the national living wage. That is quite a considerable increase in real income growth when it has been so poor for the last 12 months.”
He added: “When you look at the December data, lower levels of activity within the NHS due to strike action did pull down the GDP numbers.
“Clearly if operations and other procedures are delayed it is reasonable to expect a surge in activity there in the coming months.”
Chief executive David Haigh, founder of industry analysts Brand Finance, believes the Coronation will provide a boost of up to £1.2billion to the economy.
He said: “The benefit will be felt particularly in tourism, airlines, hotels, retail and with domestic consumers stocking up on merchandise and food and drink to celebrate.
“There are also many unseen advantages harder to quantify.
“For example, we expect there will be in excess of 150 television news crews from around the world covering the Coronation.
“One cameraman from Channel 9 in Australia told me that when they cover such royal events, their audience doubles.
“In effect, the UK will receive a fantastic, global, free television advertisement that will hugely encourage people to visit this country and spend money here. How do you quantify that? We believe this factor alone is worth several hundreds of millions to the UK economy.”
Hotels search website Trivago confirmed a brisk trade, with London hotels raising their prices by almost two-thirds for the Coronation.
Axel Hefer, Trivago chief executive, said the group has seen hotel prices in the capital jump by 60 percent year-on-year for Coronation day on May 6, with prices hitting £254 a night for early bookers.
This compares with £154 per night for the same day last year.
Pensions expert Sir Steve Webb agreed the 10.1 percent rise due to pensioners in April was significant.However, he warned: “Last year pensioners received a rise of 3.1 percent and have faced massive energy bills since then. So I regard this as catch-up money that many pensioners desperately need.”
Tom Stevenson, investment director at Fidelity, said he thought there would still be a recession but it would be less damaging than once feared.
He said: “Last autumn people were talking about a long and deep recession. People are now expecting a shorter and shallower recession.
“Inflation is already on its way down. The Government is talking about halving inflation and I don’t think that’s a particularly ambitious target. That is going to happen. The good news about falling inflation is that it takes pressure off the Bank of England to raise interest rates.
“Mortgage rates are going to start to stabilise and come down. We’re already seeing it and that is absolutely key to consumer confidence.
“If a five-year fixed mortgage rate is going to stabilise at about four percent and not get any higher than that, then people can start making plans for the future.
“So I think that the slowdown in the housing market may be less severe than people expected and that’s a key thing for the UK economy.”
