Outside of the whole 'mini-budget' fiasco involving Liz Truss and Kwasi Kwarteng back in September 2022, budget days aren't really big market movers for gilts and the pound. This time around, it should be no different. Jeremy Hunt is now speaking in parliament and is setting out the spring budget. The difference here is that this is one that is going to be very political as it comes before the upcoming UK election later this year.
The most notable announcement should be a cut to national insurance contribution, so as to also incentivise the public to reenter the labour market. We are not likely to see a cut to income tax, as the Tories are likely to save that as part of their election promises. Here is what Hunt has announced today:
- OBR sees inflation below 2% target in a few months' time
- OBR forecasts shows 2024 GDP growth of 0.8%
- OBR forecasts show 2025 GDP growth of 1.9%
- Headline debt seen falling in every year of OBR forecast
- Budget deficit seen falling to 2.7% in 2025/26, 2.3% in 2026/27, 1.6% in 2027/28, and 1.2% in 2028-29
- Abolishes £90 charge for debt relief orders
- Alcohol duty freeze extended until February 2025, and 5% 'temporary' cut in fuel duty maintained
- To introduce new "British ISA" on top of existing one, allowing investments of £5,000 in British firms
- Maintains plan to increase public spending by 1% in real terms
- Capital gains tax on residential property sales will be lowered to 24%, down from 28%
- Windfall tax on energy firms extended by another year to 2029
- There will be a one-off increase in tobacco duties
- Will cut main rate of employee national insurance contributions by 2%
- The national insurance cuts will bring an extra 200,000 people into the workforce