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:
Hunt on inflation
“Despite continuing global instability, the 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.”
Hunt on growth
“In November, the (OBR) expected that the UK economy would enter recession in 2022 and contract by 1.4% in 2023. That left many families feeling concerned about the future.
“But today, 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.”
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Hunt on unemployment
“They … 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.”
Hunt on debt
“I now turn to the Prime Minister’s second priority, which is to reduce debt. Here too our plan is on track. 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.”
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Hunt on borrowing
“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.
“Even better, in the final two years of the forecast our current budget is in surplus, meaning we only borrow for investment and not for day-to-day spending.”
Hunt on technical recession
“Today the Office for Budget Responsibility forecast that because of changing international factors and the measures I take, the UK will not now enter a technical recession this year.
“They forecast we will meet the Prime Minister’s priorities to halve inflation, reduce debt and get the economy growing.”
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Hunt on 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.
“That means that every single pound a company invests in IT equipment, plant or machinery can be deducted in full and immediately from taxable profits.
“It is a corporation tax cut worth an average of 9 billion pound 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.”
Hunt on the state of the economy
“In the face of enormous challenges I report today on a British economy which is proving the doubters wrong. In the autumn we took difficult decisions to deliver stability and sound money. Since mid-October, 10-year gilt rates have fallen, debt servicing costs are down, mortgage rates are lower and inflation has peaked.”
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Hunt on 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.”
Hunt on 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.”