Jeremy Hunt’s First Budget: Mixed Reactions and a Look Ahead to Growth
The U.K. Treasury Chief Jeremy Hunt announced his first budget today, March 15th, 2023, twelve months after Rishi Sunak’s Autumn Statement. The Office for Budget Responsibility (OBR) forecasts that the U.K. economy will shrink by a modest 0.2%, inflation will drop to 2.9%, and real household disposable income will fall by 5.7%.
Hunt promised up to 30 hours of free childcare a week for eligible households with children as young as nine months. The annual tax-free allowance for pension contributions will rise from £40,000 to £60,000, while the lifetime allowance, previously set at £1.07 million, will be abolished. He also extended the Energy Price Guarantee — which caps the energy bill of a typical household at £2,500 a year — for a further three months from April.
The government is also introducing 12 new Investment Zones across the U.K. with access to interventions of £80 million over five years. The zones will be modelled on the regeneration of London’s Canary Wharf, and will be located in the West Midlands, Greater Manchester, the North East, West Yorkshire, South Yorkshire, the East Midlands, Teesside and Liverpool, along with at least one in Scotland, Wales and Northern Ireland.
Hunt announced that fuel duty on petrol and diesel will remain frozen at its current rate, while parents claiming Universal Credit will receive monthly support of up to £951 for one child and £1,630 for two children, paid upfront. The Chancellor also reclassified nuclear energy as ‘environmentally sustainable’ to allow the same investment incentives as renewable energy.
Overall, the budget was met with mixed reactions. The Conservative government was criticised for not doing enough to address the cost-of-living crisis, while the Labour opposition accused it of pilfering its policies. Liberal Democrat leader Sir Ed Davey said the budget “shows how out of touch” the government is. Jeremy Hunt insisted that the British economy was “proving the doubters wrong”, and that the measures announced in the budget would help to boost growth and “level up” areas outside of London.
0. “Winners and losers from the Budget – and what it means for your money” The Telegraph, 15 Mar. 2023, https://www.telegraph.co.uk/money/consumer-affairs/winners-losers-budget-2023-what-means-money/
1. “U.K. Economy Expected to Avoid Recession, Government Say” The Wall Street Journal, 15 Mar. 2023, https://www.wsj.com/articles/u-k-economy-expected-to-avoid-recession-government-says-2c76e4f3
2. “Spring budget 2023: six key points for employers” People Management Magazine, 15 Mar. 2023, https://www.peoplemanagement.co.uk/article/1816619/spring-budget-2023-six-key-points-employers
3. “Budget 2023: Jeremy Hunt insists plans will get people back to work” BBC, 15 Mar. 2023, https://www.bbc.com/news/uk-politics-64964911
4. “UK to swerve recession this year as Hunt vows ‘budget for growth’” POLITICO Europe, 15 Mar. 2023, https://www.politico.eu/article/uk-swerve-recession-jeremy-hunt-chancellor-exchequer-budget-growth-rishi-sunak-tories
5. “UK government announces spending, tax plans as strike action disrupts schools and travel” CNBC, 15 Mar. 2023, https://www.cnbc.com/2023/03/15/budget-uk-government-to-announce-spending-tax-plans.html
6. “UK Spring Statement: Hunt, OBR Forecast the UK Will Avoid a Recession” DailyFX, 15 Mar. 2023, https://www.dailyfx.com/news/uk-spring-statement-hunt-obr-forecast-the-uk-will-avoid-a-recession-20230315.html
7. “Jeremy Hunt avoided any ‘big bangs’ in his first budget – but there is still potential for blow ups” Sky News, 15 Mar. 2023, https://news.sky.com/story/jeremy-hunt-avoided-any-big-bangs-in-his-first-budget-but-there-is-still-potential-for-blow-ups-12834694