Following the tumultuous events and conditions of the past years with the Covid-19 pandemic, global inflationary pressures, and wars in Europe and the Middle East, the resilient UK economy has begun to turn a corner.
Inflation - already down from 11% to 4% - is expected to fall below the Bank of England's 2% target next quarter, wages are consistently rising faster than prices, debt is on track to fall as a share of the economy, and the UK is expected to experience better growth than our European neighbours this year and the years ahead.
Whilst the job is by no means done, the Chancellor has sought to capitalise on this good progress in his Spring Budget for Long Term Growth, cutting taxes to reward work, ease cost-of-living pressures, and grow the economy.
Some of the key measures announced are below.
- NATIONAL INSURANCE - Employee NI has been cut by a further 2%, from 10% to 8%, saving the average worker £900 when combined with the two percentage point cut announced in the Autumn Statement. The rate for the self-employed will be reduced from 8% to 6%
- CHILDCARE - The threshold for parents paying the high-income child benefit charge, the mechanism through which households where one parent earns more than £50,000 have to pay back some of the benefit, has been raised to £60,000. The measure will make almost half a million families better off by an average of nearly £1,300.
- NHS FUNDING - The NHS in England will receive a £2.5 billion day-to-day funding boost for 2024/25 and £3.4 billion in capital investment over the forecast period to help unlock £35 billion in productivity savings over the next Parliament by harnessing new technology like AI and cutting admin workloads - part of landmark Public Sector Productivity Plan to deliver better public services.
- FUEL DUTY - The average car driver will save £50 this year as the 5p cut and freeze to fuel duty is maintained until March 2025
- SMALL BUSINESS VAT - The VAT threshold for small businesses will be raised from £85,000 to £90,000 from April 1, taking 28,000 small businesses out of paying VAT altogether. A government-backed loan scheme, the growth guarantee fund, supporting access to finance for businesses will be extended by £200 million.
- ALCOHOL DUTY - Alcohol duty will be frozen for a further six months, to February 2025
- GREAT BRITISH ISA - Pensions and savings reforms, including the introduction of a new UK ISA allowing an additional £5,000 annual investment in UK equities tax-free and new British Savings Bonds offering savers a guaranteed rate for 3 years, will deliver better returns for savers.
The Chancellor's budget sticks to our economic plan by delivering lower taxes, better public services and more investment, while increasing size of economy, taking the long-term decisions needed to build a brighter future.
