The office for budget responsibility (OBR) expects inflation to fall from 10.7 per cent in the fourth quarter (Q4) of 2022 to 2.9 per cent by the year end, he said.
Tabling the annual UK budget in parliament yesterday, chancellor of the exchequer Jeremy Hunt said a recession will be avoided as the outlook improves, giving the treasury a potential boost. Up to £20 billion was announced for early deployment of Carbon Capture, Usage and Storage. The outlook is to “halve inflation, reduce debt and get the economy growing”.
Hunt announced higher pension savings and childcare costs to tackle the cost-of-living crisis.
OBR forecasts proved that the government’s plan for the economy was ‘working’, Hunt said, but he will ‘remain vigilant’ to take any further steps necessary for economic stability. “Our plan is working—inflation falling, debt down and a growing economy,” he said, while presenting his first full budget as a member of the Rishi Sunak-led cabinet.
“Britain is on a lasting path to growth with a revolution in childcare support, the biggest ever employment package and the best investment incentives in Europe,” he said.
The treasury said government measures to help households with higher costs bring the total support to an average of 3,300 pounds per UK household over 2022-23 and 2023-24.
A new ‘Returnerships’ skills offer for older workers and more stringent Universal Credit job search requirements were announced aimed at boosting the domestic workforce, filling vacancies and supporting economic growth.
“In line with the government’s vision for the UK to be the best place in Europe for companies to locate, invest and grow, a new policy of ‘full expensing’ will be introduced for the next three years to boost business investment in an effective cut to corporation tax of £9 billion per year,” the treasury said.
Up to £20 billion was announced in funding for early deployment of Carbon Capture, Usage and Storage (CCUS). The launch of an ‘Artificial Intelligence Sandbox’ to try new, faster approaches to help innovators get cutting edge products to market was announced.
Twelve new UK investment zones were announced. These will receive support worth £80 million over five years, including generous tax incentives, to drive growth in key future sectors and attract businesses to left-behind parts of the country.
New initiatives to tackle labour shortages, including support to get people with disabilities into work, as well as helping those aged over 50 to retrain were also announced in the budget.
Further research and development tax relief support worth around £500 million per year was announced for loss-making small and medium enterprises (SMEs). This will help nearly 20,000 SMEs. It comes into effect from 1 April.
Super deduction tax will be replaced with the Introduction of a full capital expensing programme for the next three years. This implies companies can write off the full cost of qualifying plants and machinery investments in the year they invest.
The economic and fiscal outlook has brightened somewhat since OBR’s previous forecast in November, the office said. The near-term economic downturn is set to be shorter and shallower; medium-term output to be higher; and the budget deficit and public debt to be lower.
But this reverses only part of the costs of the energy crisis, which are being felt on top of larger costs from the pandemic. And persistent supply-side challenges continue to weigh on future growth prospects, OBR noted.
Fibre2Fashion News Desk (DS)