The UK chancellor of the exchequer, Jeremy Hunt, claimed the British economy was now “proving the doubters wrong” by narrowly avoiding recession this year, as he introduced a spring budget aimed at boosting the supply of labour and business investment, while cushioning energy price rises.
Britain is still on course for its biggest-ever drop in living standards over 2022 and 2023, despite inflation being predicted to dip below 3 per cent by year end. Labour leader Keir Starmer said the government’s economic stewardship amounted to no more than “managed decline”.
Mr Hunt was appointed chancellor by former prime minister Liz Truss last October to bring calm after the disastrous intervention in the economy by his short-lived predecessor, Kwasi Kwarteng. Mr Hunt’s budget on Wednesday contained no big surprises, with all of its main spending and tax reforms, such as childcare supports and a corporation tax rise, well trailed beforehand.
Northern Ireland will be among the beneficiaries of a series of measures designed to boost investment. The North will be the location of one of 12 new special “investment zones” modelled on Canary Wharf in London and Liverpool’s docklands. Along with the other 11 regions, the North will be entitled to apply for £80 million in government fiscal supports to dole out in subsidies.
Mr Hunt also promised an extra £130 million (€148 million) in funding for the Northern Ireland Executive over the next two years, although supplementary tables provided by the treasury suggested the overall public purse for the North would still fall by 2025.
On the cost-of-living side, Mr Hunt confirmed that energy price caps would be extended for a further three months. He is also freezing duties on fuel and draught beer.
In a move criticised by Labour as a gift to the wealthy, Mr Hunt also scrapped a £1.07 million lifetime limit on tax-free pension contributions.
The budget was a mixed-bag for British businesses. A flagged rise in the rate of corporation tax from 19 per cent to 25 per cent is still due to go ahead in coming months. Some backbench Tories had pushed for the move to be scrapped.
Instead, Mr Hunt brought in a new three-year scheme to allow businesses write off the cost of new equipment and technology against their tax bills. This will cost £9 billion per year.
He also mocked Labour plan’s to review business taxation by saying it only needed to make one point: “They [Labour] put them up, we [Conservatives] cut them.”
Brexit has crimped the UK’s supply of labour, with up to a million job vacancies in the economy. Mr Hunt said the government would tackle this by introducing internships for older workers and extending free childcare supports to tempt more parents back into the workforce. The implementation of 30 hours of free childcare to all children under five is being staggered over several years.
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Britain has also reclassified nuclear as a green fuel for the purposes of calculating incentives, and promised fiscal supports for carbon-capture projects.
“The declinists are wrong and the optimists are right. We [will] stick to the [economic] plan because the plan is working,” said Mr Hunt.
Mr Starmer said the budget left Britain “stuck in the waiting room, with only a sticking plaster to hand ... falling behind our competitors, the sick man of Europe once again”.
Britain’s independent fiscal watchdog, the Office for Budget Responsibility, estimates that after the measures in the budget, the British economy would shrink by 0.2 per cent this year and narrowly avoid a technical recession, which requires two quarters of decline. Growth is expected to be 1.8 per cent in 2024, rising to 2.5 per cent the following year.
