FT’s quick guide to Budget 2023 -Dlight News

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Chancellor Jeremy Hunt on Wednesday unveiled a long list of measures to boost UK economic growth, but the medium-term outlook remained relatively unchanged.

Hunt said his budget was for “long-term, sustainable, healthy growth that pays for our NHS and schools, creates jobs for young people and provides a safety net for older people”.

It includes measures aimed at boosting business investment and employment among different groups, including mothers, older workers and the disabled.

But the Office for Budget Responsibility, a fiscal watchdog, only marginally revised up its medium-term growth forecast.

‘Budget for Growth’. . .

• a £5bn extension of free childcare for one- and two-year-olds in England, to help parents return to work sooner; Schools offer wraparound care

• 100 percent allowance on business capital expenditure for three years

• An increase in the £40,000 limit on tax-free annual pension contributions – unchanged for the past nine years – to £60,000, and the abolition of the lifetime allowance to discourage early retirement.

• Returnships to help people over 50 return to work

• Launch of 12 new low-tax zones designed to boost economic growth and reduce regional disparities

• Functionality assessments have been abolished, allowing disabled people to sign up for jobs without fear of losing their benefits.

• Tax breaks for the entertainment industry

. . . Along with measures to ease the cost of life emergencies

• Extension of fuel duty freeze for 12 months

• Alcohol duty rate fixed till August 2023

• An extension of the £2,500 energy price guarantee for three months from April, avoiding a sharp rise in household bills this spring

• In Q2 2023, annual inflation has been revised up to 6.9 percent, from the previous estimate of 8.9 percent.

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The UK’s medium-term economic outlook has changed little. . .

• By Q1 2028, the economy is forecast to be 8.7 percent larger than in the final three months of 2019, before the Covid-19 pandemic; This is only marginally higher than the 8.1 percent increase forecast in November

• Average annual growth is projected to be 1 percent from the eve of the coronavirus pandemic to 2028; It was 2.75 percent before the 2007-08 global financial crisis

• Real household disposable income per person – a measure of real living standards – is expected to decline by a cumulative 5.7 per cent between 2022-23 and 2023-24. While this is 1.4 percent below the November forecast, it will still be the biggest two-year decline since records began in 1956-57.

• This is despite the fact that the OBR now expects the UK economy to contract by just 0.2 per cent this year, up from the minus 1.4 forecast in November, helped by lower energy prices.

• The UK economy is expected to return to its pre-pandemic peak in mid-2024. This is six months earlier than expected in November, but later than other G7 countries

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. . . But the fiscal outlook has brightened

• Borrowing has been cut from £170bn to £152.4bn in 2022-23, with an £8.5bn downward revision for 2023-24, helping to reduce the cost of the government’s energy price guarantee.

• In 2027-28, borrowing is projected to be £49.3bn, £19.9bn less than previously forecast.

• Underlying debt — or accumulated debt over time — is forecast to peak in 2026-27, a year later than the November forecast, at 94.8 percent of gross domestic product. In 2027-28, underlying debt is expected to be 94.6 percent of GDP, down 2.6 percent from the November forecast.

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