British households and businesses anxiously wait for Chancellor Rishi Sunak to announce his Spring Statement tomorrow, a missive that will outline how the government intends to navigate the toughest economic headwinds faced in a generation. 

Yesterday the Bank of England raised interest rates back to the pre-pandemic level of 0.75%, deploying the fiscal measure to stop the economy being stunted by a double-digit hike in inflation rates for the first time in 40 years.

Dire forecasts were further compounded as BoE Governor Andrew Bailey warned that the UK was at the whims of globalised hurdles due to Russia’s invasion of Ukraine that will deepen the nation’s cost of living crisis.

On the eve of Chancellor Sunak’s spring statement, the chance of the UK economy going into recession this year has risen to 32%, according to the latest odds from the Smarkets betting exchange.

“The latest Smarkets prices make the likelihood of a 2022 recession an alarmingly high 32%, while there is almost a 3-in-4 chance of inflation hitting 7.5% by July,” explained Matt Shaddick, Smarkets Head of Political Markets.

Following the BoE’s latest intervention, it’s now over to Sunak as to how the UK government will avoid the economy spiralling past the target inflation rate of 7.25%.   

The Chancellor is expected to deliver an action plan to help UK households and businesses manage the increase in day-to-day prices on fuel, energy and food costs

Monitoring tomorrow’s Spring Statement, Smarkets noted: “We have released a market on which words or phrases Sunak will utter during his speech. There’s a 50% chance he’ll say ‘Energy Bills’. ‘Hard Working Families’ is at a 33% chance of getting a mention, although ‘Cost of Living Crisis’ is less fancied at 20%.” 

Tasked with leading Britain out of an imminent crisis, Smarkets notes that the Spring Statement will be a make-or-break moment for the high ambitions of Rishi Sunak.

Though Conversative peers have earmarked Sunak as the front runner to replace Boris Johnson as party leader, Sunak’s PM credentials remain untested with the general public.   

Ahead of a critical Spring Statement, Shaddick remarked- “Rishi Sunak’s chance of becoming the next PM has been on the slide recently and a tricky-looking spring budget may not help his prospects.”

“He remains favourite to succeed Boris Johnson as the next Tory leader although his odds are on the slide, from a high of 40% back in January to today’s 23%.”

“On the plus side, the danger of petrol prices reaching £2 per litre seems to have receded and that might be a factor when the Chancellor announces a decision on fuel duty.”