A shallow recession was widely predicted this year but Mr Hunt says the latest OBR forecasts show that the UK should narrowly avoid a recession.

He expects UK GDP to shrink by 0.2% this year but to avoid a "technical recession" - two quarters of negative GDP growth. 

Mr Hunt says there should also be good news on inflation, which has soared in the last year.

Forecasts suggest CPI should fall from 10.7% at the end of 2022 to 2.9% by the end of 2023, he said.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: "Jeremy Hunt wasted no chances in pulling the biggest rabbit from his hat, brandishing the forecast from the Office for Budget Responsibility that the UK will swerve a recession this year.

"Things were already looking up, with consumer and business confidence rising, and spending proving much more resilient. The rebound in the huge services sector in February had already raised hopes that two back-to-back quarters of negative growth will be avoided and now that more pieces of the jigsaw are now in place a rosier picture is emerging.

"But given that the cost-of-living crisis is still proving painful, economic activity is still likely to be slow to power up and a period of stagflation not super-charged growth is still expected. The Chancellor is gearing up to deliver fresh incentives to loosen a tight labour market, spark greater productivity and bring in foreign investment but it’s going to still be a hard slog ahead.”

Mr Hunt began his Budget in the Commons just after 12.30pm today and Financial Planning Today is bringing full coverage and analysis of what it means for the Financial Planning profession.

Mr Hunt is expected to focus on measures which get more people back to work and he has called his budget a "Budget for Growth.'

He said he plans to tackle a lack of business investment and economic inactivity.

The Chancellor said that the UK economy should return to GDP growth this year with growth gradually improving over the coming years.

Among the expected Budget measures today is:

• Increasing the Lifetime Allowance (LTA) from just over £1m to £1.8m 

• Increasing the Money Purchase Annual Allowance from £4,000 to £10,000

• Potentially increasing the annual allowance on pension contributions from £40,000 to £60,000

Mr Hunt is also set to provide more affordable childcare and the Treasury has announced this morning an extension to energy bills support for a further three months.

Despite this, with government finances still under pressure it is believed he may have relatively little room to manoeuvre and some experts have warned that on pensions he could remove some of the benefits of pension tax relief to pay for his plans.

Mr Hunt is also under pressure to scrap or scale back a planned rise in Corporation Tax from 19% to 25% from April to help business.

• Financial Planning Today will be reporting on the Budget and key measures from 12.30pm so please check back later for updates and sign up to our newsletters to get all the stories. You can do this by registering for the website.