Russia’s actions have significantly worsened the global growth outlook. The IMF point to the severe energy crisis in Europe sharply increasing costs of living and hampering economic activity. d The OBR attribute the majority of the downward revision to cumulative growth in the UK’s potential output over the next 5 years to the increase in energy prices since March. e Countries around the world are balancing the need to respond to cost of living pressures against the need to ensure fiscal sustainability. Several countries have reaffirmed their commitments to medium-term fiscal sustainability. In Europe, Germany plans to reimpose their “debt brake” in 2023, [footnote 11] which would limit government borrowing, while France has set out commitments to get debt falling over the medium term. [footnote 12] The European Commission is consulting on changes to the Stability and Growth Pact, proposing to reintroduce the debt and deficit rules that have been suspended since the COVID-19 pandemic, while allowing member states more time to meet them. [footnote 13] Elsewhere, Canada [footnote 14] and Australia [footnote 15] have reiterated their commitment to reduce the debt-to-GDP ratio over the medium term. In the labour market, unemployment was 3.6% in Q3, close to its lowest rate in 50 years. At the same time the economic recovery from the pandemic has pushed the total number of vacancies in the economy above the total number of unemployed people for the first time on record. Working age inactivity remains high, with 630,000 more people inactive compared to pre-pandemic levels. Hiring difficulties are contributing to strong nominal wage growth of 6.0% (including bonuses) in Q3. [footnote 39]

a) NBP/electricity forward prices average for 2023 compared to pre-pandemic average taken over ten-working-day observation window to 4 November. The Ukraine visa schemes are also some of the world’s most generous humanitarian schemes, with the UK ranked 7th in terms of the number of Ukrainian arrivals. The government has helped over 140,000 people settle in the UK through the Homes for Ukraine Scheme and Ukraine Family Scheme. Growing the Economy Reforms to Research and Development (R&D) tax reliefs - For expenditure on or after 1 April 2023, the Research and Development Expenditure Credit (RDEC) rate will increase from 13% to 20%, the small and medium-sized enterprises (SME) additional deduction will decrease from 130% to 86%, and the SME credit rate will decrease from 14.5% to 10%. These rate changes will be legislated for in the Autumn Finance Bill 2022. This reform ensures that taxpayer support is as effective as possible, improves the competitiveness of the RDEC scheme, and is a step towards a simplified, single RDEC-like scheme for all. The government will consult on the design of a single scheme, and ahead of Budget work with industry to understand whether further support is necessary for R&D intensive SMEs, without significant change to the overall cost envelope for supporting R&D. As previously announced at Autumn Budget 2021, the R&D tax reliefs will be reformed by expanding qualifying expenditure to include data and cloud costs, refocusing support towards innovation in the UK, and targetting abuse and improving compliance. These changes will be legislated for in Spring Finance Bill 2023.improved ambulance response times for Category 2 incidents to 30 minutes on average over 2023-24, with further improvement towards pre-pandemic levels in 2024-25 figures reflect outturn in PESA, adjusted for provisional estimates of core spending. For devolved administrations, figures represent the Barnett consequentials of departmental COVID-19 funding less the element they carried forward from 2021-22 into 2022-23 b) HM Treasury calculation of the underlying CPI basket, based on Consumer price inflation, UK: October 2022, Office for National Statistics, November 2022. Memo: Total Capital DEL excluding ringfenced COVID-19, energy support, and intragovernmental leases(3)

Reflecting both temporary factors, including a reduction in working days in September, and an underlying loss of momentum in the real economy, GDP fell in Q3 by 0.2% with all 13 manufacturing sub-sectors contracting. [footnote 54] Survey data for October shows economic activity slowing, both in the UK and the euro area. [footnote 55], [footnote 56] Additionally, business confidence fell to levels last seen during the pandemic. [footnote 57] The OBR has said that support over the winter will boost household consumption and GDP, although not by enough to avoid a recession starting in Q3 2022. [footnote 58] keeping the UK’s headline Corporation Tax Rate internationally competitive at 25% – the lowest in the G7 – and protecting 70% of trading companies at 19% with the Small Profit Rate The debt rule will ensure that future policy decisions maintain the sustainable path achieved at the Autumn Statement. Alongside this, limiting borrowing will ensure debt reduction is delivered sustainably through tax and spend policy. Public sector net borrowing at 3% of GDP is broadly the level of borrowing which keeps debt on a downward trajectory, so a rule to keep borrowing below this level creates a clear path to ensure debt falls over the medium term. Targeting the fifth year of the forecast provides additional space to allow the economy to recover from the recession.

Official Development Assistance (ODA) Spending - The government remains committed to returning to spending 0.7% of Gross National Income (GNI) on ODA when on a sustainable basis the government is not borrowing for day-to-day spending and underlying debt is falling. In accordance with the International Development (Official Development Assistance Target) Act 2015, the government will continue to review and confirm each year whether a return to spending 0.7% of GNI on ODA is possible against the latest fiscal forecast. In the meantime, the government’s plans assume ODA spending will be around 0.5% of GNI. Science and innovation are some of the UK’s greatest strengths. With less than 1% of the world’s population, the UK hosts 3 of the world’s 10 best universities, [footnote 31] has produced up to 13% of the world’s most impactful research [footnote 32] and has the second highest number of Nobel Laureates of any nation. [footnote 33] The UK also ranks fourth in the Global Innovation Index. [footnote 34] These remarkable achievements in R&D and innovation generate significant economic and social benefits for the whole of the UK and beyond. Contingent liabilities which can only be described annually, as they are ongoing risks without a fixed expiry date. Public Sector Finances, UK:September 2022, Office for National Statistics, October 2022 & Economic and Fiscal Outlook, Office for Budget Responsibility, November 2022. ↩