In his Spring Budget 2023, Mr Hunt tells us that the economy is on the right track and there will be no technical recession this year.
In the Chancellor’s Budget speech today, we heard that the Office for Budget Responsibility believes inflation will fall from 10.7% as at the end of 2022, to 2.9% by the end of 2023.
The Government believes that the measures it has taken since November have created economic stability. To continue to curb inflation Mr Hunt announced further Cost of Living Support measures including:
- Energy Price Guarantee will remain at £2,500 for the next 3 months
- Prepayment energy meter charges will be brought in line with normal direct debit charges –removing the prepayment premium
- Duty on draught products in pubs will be up to 11% lower than it is in supermarkets
- Fuel duty frozen for a further 12 months
The Chancellor believes that with inflation falling, it should now focus on growth. He announced measures that, in his opinion, incentivise business investment and increase labour supply, under the four headings of Everywhere, Enterprise, Employment and Education.
The measures announced that are likely to have the most impact on businesses and business owners include:
- The super-deduction which ends this month, will be replaced by a new policy of full capital expensing for the next 3 years. The Chancellor’s intention is to make this policy permanent
- A new credit rate will be available to loss-making companies whose R&D expenditure constitutes at least 40% of total expenditure. Qualifying companies will be able to claim a payable credit rate of 14.5% for qualifying R&D expenditure instead of the 10% credit rate for companies claiming support under the existing R&D SME scheme
- The introduction of “returnerships” – apprenticeships for the over 50s
- DWP disability benefits reform – allowing disabled benefit claimants to seek work without losing financial support
- Pension tax reforms – The Pensions Annual Tax-Free Allowance increased by 50% from £40,000 to £60,000 and the Lifetime Allowance abolished
- Wide reaching reform to childcare system including the staged introduction of 30 hours of free child care for children aged 9 months up to 5 years if both parents are working 16 hours a week
The Government is “sticking to its plan” to build for the future, bring inflation down, reduce debt and increase growth, because they believe the plan is working.
Our full Budget Summary report will be available tomorrow.
