The Spring Budget 2023 is finally here, and it brings with it a plethora of measures aimed at boosting economic growth and improving the financial outlook for businesses and households alike. In this blog post, we provide a comprehensive overview of the key measures announced in the Budget Statement.
Firstly, we examine the impact of falling natural gas prices on inflation, which is projected to drop to below 3% by the end of the year. This decrease in inflation will help businesses avoid steep increases in payroll and borrowing costs, as well as ease the squeeze on households facing a decline in living standards.
Next, we discuss the Bank of England’s base rate, which is projected to peak significantly lower than the 5% assumed in the Autumn Statement. This change is good news for homeowners and businesses, indicating a more stable financial environment.
We then delve into the critical tax measures highlighted in the Budget Statement under the Chancellor’s focus on Enterprise and Employment. While there was no change to the decision to increase the primary Corporation Tax rate to 25%, the Chancellor announced a Full Expensing approach for qualifying plant and machinery, which aims to incentivize business investment.
The Spring Budget also brings better news for SMEs, with increased R&D relief granted for R&D-intensive businesses. Although this improvement doesn’t reach the levels of relief previously available, it is a positive step forward.
The proposed abolition of the Lifetime Allowance charge, which removes the cap on the amount of pension savings someone can have, is a significant surprise in employment policies. This major shift in government policy will result in a rethink for employees regarding their approach to pension savings.
The Chancellor structured his plans around the four Es, which he believes are critical in unlocking the UK’s national potential: Enterprise, Education, Employment, and Everywhere. However, measures like increased childcare support will take time to materialize and affect growth numbers.
The budget also includes measures supporting R&D and investment in fast-growth sectors. However, it lacks a grand strategy for boosting productivity and overall economic resilience, similar to the US Inflation Reduction Act or the EU’s Green Deal Industrial Plan.
In summary, the Spring Budget 2023 brings relatively better news on the short-term economic outlook and includes several commendable measures. While it doesn’t represent a game-changing budget, it sets the stage for future growth and development.