Affecting the finances of the economy and of the people, Chancellor Jeremy Hunt announced his first Spring Budget this week directed at key changes and policies on energy, pensions, inflation, investment and more across the UK, encouraging an overview of faith toward the country’s economic Budget of growth.
Focusing on what matters most when it comes to investing, we’ve built a summary of the main announcements to give you peace in mind in your portfolio decisions.
Stabilising the Economy & Public Finances
Jeremy Hunt’s announcements on the Economy and Public Finances show inflation falling and growth rising in order to help to the UK in avoiding recession, with the opportunity to bring the economy up to a targeted speed with continued changes as it works to combat the countries debt.
- The UK’s inflation rate is predicted to fall by 2.9% by the end of 2023, down from 10.7% in the last three months of 2022.
- Overall growth of 1.8% is predicted for the next year, climbing to 2.5% in 2025 and then settling at a reliable figure of 2.1% in 2026.
- The Office for Budget Responsibility predicts the UK will avoid a recession in 2023, but they economy will shrink by 0.2%.
- Underlying debt forecast to be 92.4% of GDP this year, rising to 93.7% in 2024.
Taxation, Wages & Pensions
Tax free announcements show opportunities for workers and their lifetime savings with a positive shift toward potential for increased interest rates, while duty freezes across certain sectors show a keen interest in calming the population and economy’s financial concerns.
- Tax-free yearly allowance has for pension pots to rise from £40,000 to £60,000 having been frozen for nine years.
- The cap amount workers can accumulate in pensions savings over their lifetime before having to pay extra tax (currently £1.07m) is set to be abolished.
- Fuel duty frozen for another year matching the current 5p cut on petrol and diesel.
Nuclear & Green Energy Innovation
In line with recent government policies, the Spring Budget displays an increase in investment toward a more sustainable and innovative Britain, aligning closer with plans in neighbouring countries such as France to generate an economy dependent on itself for future energy needs. Current financial concerns have also been addressed for 2023 as the government aligns with falling inflation forecasts.
- Extension by three months to the Government subsidies limiting typical household energy bills to £2,500 a year.
- Commitment to invest £20 billion over the next two decades on low-carbon energy projects, with a focus on carbon capture and storage.
- Nuclear energy to be classed as environmentally sustainable for investment purposes, with additional promise of more public funding.
- £200 million to bring energy charges for prepayment meters into line with prices for customers paying by direct debit, affecting 4 million households.
The Workforce Economy
The post-Brexit workforce is finally being taken from consideration to strategic action, after unfortunate impacts on specific sectors including construction where occupation listed 65% in recent vacancies, showcasing a positive move in the face of current and future infrastructure increase.
- Rules on immigration are to be relaxed for five roles in the construction sector including bricklayers, masons, roofers, roof tilers, slaters, carpenters, joiners, plasterers, and construction and building trades n.e.c. to ease labour shortages.
- £63 million has been pledged for programmes encouraging retirees over 50 to go back to work, labelling them ‘returnerships’.
Business, Trade & Investment
Working to stabilise the economy and decrease inflation costs, the newly planned tax policies will enable the UK to monitor rate of growth through corporations and businesses while allowing investment in innovation to increase for potential further profitability. Planned Investment Zones such as Liverpool will also greatly benefit as demand climbs.
- Tax breaks and other benefits for 12 new Investment Zones across the UK. Each Investment Zone to be funded £80 million over the next five years.
- Companies able to deduct investment in new machinery and technology to lower taxable profits internally.
- The main rate of corporation tax paid by businesses on taxable profits over £250,000 has been confirmed to increase to 25% from the previous 19%.
- Companies with profits between £50,00 and £250m00 to pay between 19% and 25%.
- Reduced paperwork has been announced for international traders who will now also be given longer to submit customs forms.
With a largely positive outcome, the Spring Budget assures property investment's secure alignment with the UK’s growing economy, with less risk of previous inflation concerns and the avoidance of recession.
To discuss any further questions about the Budget, or the current market, get in touch with one of our dedicated team members today for further insights and trustworthy account management.