UK Spring Budget 2024: Still searching for a rabbit
Chancellor Jeremy Hunt left little in the way of surprises in a mostly pre-announced budget. The focus on voter-friendly tax cuts continues, with fiscal stimulus providing around a 0.3% boost to GDP growth through supply-side improvements. But little fiscal headroom and largely unrealistic assumptions of future spending cuts will create a very difficult fiscal inheritance for the next government.
Duration: 1 min
Date: 06 Mar 2024
Key Takeaways
The centrepiece of Chancellor Jeremy Hunt’s budget
was a 2-pence cut in national insurance contributions.
Alongside other smaller measures, this means
roughly 0.3% of GDP per annum of fiscal loosening.
There were some modest offsetting tax-raising
measures, including abolishing non-dom status. But
net tax cuts were mostly funded by running down
headroom against the fiscal rules to a wafer-thin £9bn.
The OBR’s growth forecasts were revised up and
inflation forecasts down. This came with a sting in the
tail for the chancellor by lowering forecast nominal
GDP and therefore fiscal headroom a touch.
Planned real departmental spending growth was
maintained at 1%. But future spending assumptions
are not credible.
Other sensible measures announced yesterday
include raising child benefit thresholds and an extra
ISA allowance for UK equity investment. The OBR
estimates that measures in the budget will boost
growth by 0.3% per annum.
The broad focus on tax cuts may help boost support
for the Conservatives from their core voters. But it is
unlikely to fundamentally change the party’s political
fortunes.
