The Chancellor says the UK has ‘turned the corner on inflation’ and the economy will grow
Register for free to read more of the latest local news. It's easy and will only take a moment.
Chancellor Jeremy Hunt has delivered his Spring Statement in the House of Commons describing it as a “budget for long term growth” but with an election looming he may want to see some positive change before then.
The Treasury said the Budget delivers lower taxes, better public services and more investment in a responsible way, with the Office of Budget Responsibility (OBR) confirming the Chancellor’s fiscal rules are on track to be met.
The chancellor started with good news about the latest OBR forecast showing inflation will fall below 2 per cent target "in just a few months' time" – more concretely that is expected to be in November.
The economy is forecast to grow – again from the OBR – by 0.8 per cent this year and 1.9 per cent next year leading the Chancellor to claim that the UK has "turned the corner on inflation."
Public sector borrowing will fall in every year of the forecast so the deficit will be 2.7 per cent of GDP in 2025-26 which meets the vow to get borrowing below 3 per cent of GDP three years early.
By 2028-29 it drops to 1.2 per cent of GDP – the lowest level since 2001-02.
Measures to tackle the tax gap – the difference between what should and what is collected – will bring in an additional £4.5 billion a year by 2028/29, saving nearly £10 billion for the public purse including policies announced at Autumn Statement.
In a cheeky move, the Tories nicked Labour’s ‘non-dom’ policy, though Mr Hunt claimed it came from Chancellor Nigel Lawson’s 1988 budget.
It means that new arrivals – critics would say tax dodgers – will pay the same tax as everyone else after four years, raising £2.7 billion a year without “deterring investment.”
The VAT registration threshold will increase from £85,000 to £90,000 from April in what is broadly seen as another positive move because OBR believes that this “bunching” costs the country hundreds of millions in lost economic activity.
Stamp duty relief for people who buy multiple properties in one transaction will be abolished and there will be a cut in higher capital gains tax rate on property from 28 per cent to 24 per cent.
Underlying debt will fall as a share of the economy to 92.9 per cent in 2028/29 – meeting the debt rule with £8.9 billion headroom and headline debt – the public sector's total stock of debt – will fall as a percentage of GDP every year from 2024/25.
Measures to tackle the tax gap will bring in an additional £4.5 billion a year by 2028/29, saving nearly £10 billion for the public purse when combined with policies announced at Autumn Statement.
The budget was not just an economic test but also a political one – has the Conservative government got the economy to recover well enough to persuade voters with a general election imminent and Labour ahead in the polls?
