Inflation to be more than halved 

The forecaster also says underlying debt is forecast to hit 92.4% of GDP by next year, falling every year after until 2027-28. 

These predictions comes as part of the government’s Spring Budget, in which Chancellor Jeremy Hunt has confirmed the government will be increasing corporation taxes from 19% to 25% - although he says only 10% will pay the full 25%. 

Alongside this, he said government will introduce a new tax credit for small and medium sized firms that spend 40% of their expenditure on research and development.

Additionally, he announced the government will deliver 12 new "investment zones" in the west Midlands, Greater Manchester, the north-east, South Yorkshire, West Yorkshire, East Midlands, Teesside and Liverpool - with at least one in Scotland, Wales and Northern Ireland. £8.8bn will also be set aside for sustainable transport schemes. 

On energy, Hunt says he will allocate up to £20bn for the early development of carbon capture and storage, while nuclear power will be classed as environmentally sustainable, subject to consultation, giving it access to the same investment incentives as renewable energy. 

The Chancellor also confirmed policies that would end the “prepayment premium” for those on prepayment energy meters, bringing their charges into line with comparable customers who pay by direct debit.

Alongside this, Hunt said he will return in his autumn statement with plans to increase investment in high growth firms, including measures to make the stock exchange a more attractive place to list. 

Additionally, the pensions lifetime allowance will be abolished, while the pensions annual tax-free allowance will increase from £40,000 to £60,000.  

Hunt also announced the government would publish a white paper on disability benefits reform, with the work capability assessment will be abolished. A new programme called universal support will also be set up to help people get into work, with up to £4,000 per person being spent, while allocating £400m for mental health and muscular skeletal support. 

Outside of this, Hunt announced the government would continue the 5p fuel duty cut freeze – following a trend dating back to 2011, saving drivers £100 this year. 

Prior to the budget, the chancellor had also announced the Energy Price Guarantee would remain at its current level of £2,500 a year until June – saving households £160.