Wednesday Mar 15 2023

UK economy: What happened in the budget today?

Britains Chancellor of the Exchequer Jeremy Hunt holds the budget box on Downing Street in London, Britain March 15, 2023. — Reuters
Britain's Chancellor of the Exchequer Jeremy Hunt holds the budget box on Downing Street in London, Britain March 15, 2023. — Reuters

LONDON: British Finance Minister Jeremy Hunt set out his budget on Wednesday, seeking to snap the world's sixth-biggest economy out of its run of stagnant growth. Below are the details as set out in parliament:


"Despite continuing global instability, the Office for Budget Responsibility (OBR) report today that inflation in the UK will fall from 10.7% in the final quarter of last year to 2.9% by the end of 2023."


"The OBR forecast we will not enter a recession at all this year with a contraction of just 0.2%. And 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."


"They OBR … expect the unemployment rate to rise by less than one percentage point to 4.4%, with 170,000 fewer people out of work compared to their Autumn forecast."


"Underlying debt is forecast to be 92.4% of GDP next year, 93.7% in 2024-25; 94.6% in 2025-26, and 94.8% in 2026-27, before falling to 94.6% in 2027-28."


"At the Autumn Statement, I also announced that public sector net borrowing must be below 3% of GDP over the same period. The OBR confirm today that we are meeting that rule with a buffer of 39.2 billion pounds. 

In fact, our deficit falls in every single year of the forecast, with borrowing falling from 5.1% of GDP in 2023-24, to 3.2% in 2024-25, 2.8% in 2025-26, 2.2% in 2026-27 and 1.7% in 2027-28.

Technical recession 

"Today the OBR forecast that because of changing international factors and the measures I take, the UK will not now enter a technical recession this year.

Capital expensing 

"I can announce that we will introduce a new policy of 'full expensing' for the next three years, with an intention to make it permanent as soon as we can responsibly do so.

"It is a corporation tax cut worth an average of 9 billion pounds a year for every year it is in place…its impact on the economy will be huge. The OBR says it will increase business investment by 3% for every year it is in place."

Corporation tax

"I want us to have the most pro-business pro-enterprise tax regime anywhere. Even after the corporation tax rise this April, we will have the lowest headline rate in the G7.

"Only 10% of companies will pay the full 25% rate."


"In eligible households where all adults are working at least 16 hours, we will introduce 30 hours of free childcare not just for three-and-four year-olds, but for every single child over the age of 9 months.

"Working parents of two-year-olds will be able to access 15 hours of free care from April 2024, helping around half a million parents. From September 2024, that 15 hours will be extended to all children from 9 months up, meaning a total of nearly one million parents will be eligible.

"From September 2025 every single working parent of under 5s will have access to 30 hours of free childcare per week."

Boosting UK investment after SVB collapse 

"I will return in the Autumn Statement with a plan to deliver that. It will include measures to unlock productive investment from defined contribution pension funds and other sources, make the London Stock Exchange a more attractive place to list, and complete our response to the challenges created by the US Inflation Reduction Act."

Defence spending 

"I confirm that we will add a total of 11 billion pounds to our defence budget over the next five years and it will be nearly 2.25% of GDP by 2025."


"(We will) abolish the Work Capability Assessment in Great Britain and separate benefit entitlement from an individual's ability to work. As a result, disabled benefit claimants will always be able to seek work without fear of losing financial support.

"We will fund a new programme called Universal Support.

"This is a new, voluntary employment scheme for disabled people where the government will spend up to 4,000 pounds per person to help them find appropriate jobs and put in place the support they need. It will fund 50,000 places every single year."

Pension tax

"Today I will increase the pensions annual tax-free allowance by 50% from 40,000 pounds to 60,000 pounds.

"I will go further and abolish the Lifetime Allowance altogether."

Fuel duty

"Because inflation remains high, I have decided now is not the right time to uprate fuel duty with inflation or increase the duty.

"For a further 12 months, I'm going to maintain the 5p cut … and I'm going to freeze fuel duty too. That saves the average driver 100 pounds next year and around 200 pounds since the 5p cut was introduced."