Chancellor Jeremy Hunt delivered his Spring Budget last week, during which he provided an economic update from the Office for Budget Responsibility (OBR). The latest projections showed the rate of inflation is expected to fall below the Bank of England’s 2% target level in “a few months’ time.” The OBR expects economic growth of 0.8% this year, with growth of 1.9% in 2025, higher than the 1.4% figure previously predicted.
The Chancellor said his Budget was “A plan to grow the economy, a plan for better public services, a plan to make work pay… Growth up, jobs up and taxes down.”Headline Budget announcements included:
National Insurance Contributions (NICs)
Child Benefit
New savings products
Business taxation
Non-dom tax regime
Property taxation
Public Sector Productivity Plan
The Chancellor announced a new Public Sector Productivity Plan to restart public sector reform and change the Treasury’s traditional approach to public spending. This includes a £2.5bn funding boost for the NHS in 2024/25, allowing the service to continue its focus on reducing waiting times for patients and £3.4bn to modernise NHS IT systems. The plan also includes £800m of additional investment to boost productivity across other public services, including £230m for drones and new technology to free up police officers’ time for frontline work and £75m to roll out the Violence Reduction Unit model across England and Wales.
Budget reaction
Director of the Institute for Fiscal Studies (IFS), Paul Johnson, commented on the Budget, “The OBR marginally increased its forecasts for economic growth, but the overall public finance picture remains largely unchanged from the autumn. The Chancellor is still on track to stabilise debt as a fraction of national income in five years’ time… While his ambition to improve public sector efficiency and productivity is the right one, and his injection of capital funding into the NHS is a sensible way of doing so, delivering on such plans and securing cash savings will be very tough indeed.”
In other news
Last week new data showed that India’s economy grew by 8.4% in the final quarter of 2023, supported by strong construction and manufacturing activity. Retaining its title as the world’s fastest growing major economy, India is forecast to leapfrog Germany and Japan as the world’s third largest economy in the coming years. The Indian government estimate growth of 7.3% for the 2024 fiscal year to 31 March.
In China, Premier Li Qiang outlined a series of measures last week aimed at boosting its flagging economy, whilst revealing an ambitious 5% growth target for 2024.
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All details are correct at time of writing (13 March 2024)
