Budgets are never delivered in isolation. The first decade of our century, following the end of the Cold War, saw sustained low inflation driven by commodity prices and China exporting cheap mass produced goods to the West, and a credit boom. Notwithstanding a really strong global economy that could have been used to improve the national finances the Government of the day borrowed and spent. It felt good while it lasted but the inevitable crash when it came was enormously damaging and has continued to have deep consequences.
By contrast the current global economic backdrop is extremely tough: the ongoing impact of Covid and Russia’s attack on Ukraine are among the challenges globally impacting inflation, government spending and growth.
The Chancellor had a difficult task in challenging circumstances. He delivered an impressive result which saw through the current challenges to present an economic plan that supports households while delivering on investment and reforms to drive growth.
Since October, through the Energy Price Guarantee, the Government has subsidised energy bills: supporting people through difficult times and much higher costs. The Government is maintaining the EPG at £2,500 until June. This will support households while reduced wholesale prices begin to feed through into lower household bills. The Government will also be freezing fuel duty for a thirteenth year, saving the average driver around £200.
Long-term sustainable growth pays for public services, which is why we are rewarding businesses for investing in the UK and incentivising increased workforce participation.
To reduce our post Covid waiting lists we continue to invest record sums in the NHS and this has required us to increase corporation tax. However generous “capital allowances” will encourage businesses to invest creating jobs and delivering growth.
The expansion overtime of free childcare will help parents from when their child is 9 months old to when they start school: thereby helping parents who wish to do so to increase working hours.
Meanwhile changes to Pension Taxation will help some of those closer to retirement (including doctors) to stay in the workforce for longer – maintaining the skills we need in our communities.
The budget is a really solid combination which helps people in the short term but will also deliver in the years to come.