The chancellor began with the assertion the Office for Budget Responsibility now predicts the UK will avoid a technical recession. The OBR also predicts inflation will fall to 2.9% by the end of the year.
There was an emphasis on economic growth. Forecasts of slightly improved UK GDP growth painted a marginally better picture, however, the UK will still lag growth rates of other major economies.
“After this year the UK economy will grow in every single year of the forecast period: by 1.8% in 2024, 2.5% in 2025, 2.1% in 2026, and 1.9% in 2027,” Jeremy Hunt said.
Our March 2023 inflation forecast for the end of this year. Full forecast published after the Chancellor’s #SpringBudget speech pic.twitter.com/Ic8aLZRWnw
— Office for Budget Responsibility (@OBR_UK) March 15, 2023
The budget lacked any meaningful changes on tax and the focus was on menial changes to energy prices which will not improve the cost of living crisis.
Many of the measures are designed to bring people back to work and enhance the UK’s work force.
The headline announcements include changes to childcare and the abolishment of the pension lifetime allowance.
Tax
Although the chancellor said the government desired a pro-business, pro-enterprise tax rate, he pushed on with hiking corporation tax to 25% for businesses generating more than £250,000 in profit.
This is good for small businesses but unattractive to large multinationals.
Only 10% of companies will pay full 25% corporation tax when it is raised from 19% in April. Companies with profits of between £50,000 and £250,000 will get some relief. And for small businesses making profits of less than £50,000 there will be no change. @GarryWhite #Budget23
— Charles Stanley Wealth Managers (@_CharlesStanley) March 15, 2023
All investment will be counted as a capital allowance and will be applied to all business. This means all investment in plant and equipment can be deducted from that year’s tax.
Savings
ISA limits will be kept the same. The current limit is £20,000 for an ISA in 2022/23. The £20,000 limit has been in place since 2017/18. And all under a Conservative government.
ISA rates, and starting rates for savings to be maintain. This also include Lifetime ISAs, sadly no change to the £450,000 threshold (or the penalty). #Budget2023
— Martin Lewis (@MartinSLewis) March 15, 2023
Jobs
Older people are being enticed back into the work force with apprenticeships for over 50s, changes to pensions to keep doctors in the NHS, and reforms to childcare.
£400m will be allocated to help support workers with mental health and back pain.
Carbon capture and nuclear power schemes are designed to create jobs across the country.
Pensions
Pension tax free allowance increased from £40,000 to £60,000 and the lifetime allowance of £1m has been abolished.
Energy
The energy price cap of £2,500 for a typical household will be extended for the next three months.
The rates charged for pre-pay energy meters will be brought in line with rates for those who pay by direct debit.
Fuel duty will be frozen and the 5p cut to duty will remain.
Nuclear power will be classed as environmentally sustainable and will incentivise private investment in the sector. The chancellor announced the launch of Great British Nuclear to help bring down the price of electricity.
Education
A new £600 incentive for childminders entering the profession, and £1,200 for those joining an agency.
Every child over 9 months will receive 30 hours of free child care following a staged introduction to the scheme. This will help bolster the UK’s workforce.
Environment
£20bn will be committed to to carbon capture to help reduce net carbon emissions.
Alcohol
The duty on alcohol will be frozen.
Pints served in pubs will attract 11p lower duty than pints sold in supermarkets.
Debt
Jeremy Hunt says underlying debt will be 92.4% of GDP by next year and will continue to fall as proportion of GDP each year there after. This government’s debt forecasts should be taken with a truck load of salt.
The deficit is forecast to be 1.7% by 2027-28.
Innovation
R&D tax credits will be expanded.
To build a hub for AI in the UK the chancellor set out a £1m prize each year for ten years for innovation in the sector.
Defence
£11bn will be added to the defence budget.
Pot holes
An additional £200m will be committed to improving the road network, including potholes.
Leisure Centres
Hardly a headline grabber, but a £63m fund will be set up to save swimming pools and leisure centres.
Investment Zones
Twelve new investment zone have been announced which are supposed to follow in the foot steps of Canary Wharf.