In the wake of Jeremy Hunt's latest 2023 budget announcement in the House of Commons, we took a look into the key takeaways and what this means for the UK economy in 2023.
Economy and finances:
- The latest outlook from the Office for Budget Responsibility predicts the UK will avoid recession in 2023, but the economy will shrink by 0.2%
- Growth of 1.8% predicted for next year, with 2.5% in 2025 and 2.1% in 2026
- The UK's inflation rate predicted to fall to 2.9% by the end of this year, down from 10.7% in the last three months of 2022
- Underlying debt forecast to be 92.4% of GDP this year, rising to 93.7% in 2024
Taxation and wages:
- The current cap on the amount workers can accumulate in pensions savings over their lifetime before having to pay extra tax (currently £1.07m) to be abolished
- Tax-free yearly allowance for pension pot to rise from £40,000 to £60,000 - having been frozen for nine years previously
- Fuel duty frozen - the 5p cut to fuel duty on petrol and diesel, due to end in April, has been kept for another year
- Alcohol taxes to rise in line with inflation from August, with new reliefs for beer, cider and wine sold in pubs
- Tax on tobacco to increase by 2% above inflation, and 6% above inflation for hand-rolling tobacco
Energy:
- Government subsidies limiting typical household energy bills to £2,500 a year extended for three months, until the end of June
- £200m to bring energy charges for prepayment meters into line with prices for customers paying by direct debit - affects 4m households
- Commitment to invest £20bn over next two decades on low-carbon energy projects, with a focus on carbon capture and storage across the UK
- Nuclear energy to be classed as environmentally sustainable for investment purposes, with promise of more public funding for the sector
- £63m to help leisure centres with rising swimming pool heating costs, and invest to become more energy efficient as a whole
Business and trade:
- Main rate of corporation tax, paid by businesses on taxable profits over £250,000, confirmed to increase from 19% to 25% to reflect the current economic outlook
- Companies with profits between £50,000 and £250,000 to pay between 19% and 25%
- Companies able to deduct investment in new machinery and technology to lower their taxable profits annually
- Tax breaks and other benefits for 12 new Investment Zones across the UK, funded by £80m each over the next five years
- Reduced paperwork for international traders, who will also be given longer to submit customs forms under new streamlined rules
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