Spring Budget set for 15 March 2023

Chancellor Jeremy Hunt has announced that his Spring Budget will take place on 15 March 2023, amid continuing high inflation and rising interest rates.

What will the Chancellor announce to boost UK growth ahead of a general election likely in 2024?

One of the observations from Hunt's first Budget on 17 November 2022 was the lack of much in the way of measures to encourage growth in the UK economy.

With the tax burden rising to a 70-year high, frozen tax allowances and restrictions announced on such matters as eligibility for R&D tax credits, it appeared that the Chancellor was mainly focussed on quietening the markets following Kwasi Kwarteng's growth-focussed Budget on 23 September 2022.

In fact, most of Kwarteng's Budget had been reversed by Hunt - see: What tax changes have survived the mini Budget?

So what can we expect in March 2023?

In a statement to the House of Commons on 19 December, Hunt said:

"Today I can inform the House that I have asked the Office for Budget Responsibility (OBR) to prepare a forecast for 15 March 2023 to accompany a Spring Budget.

This forecast, in addition to the forecast that took place in November 2022, will fulfil the obligation for the OBR to produce at least two forecasts in a financial year, as is required by legislation."

The Treasury then issued an invitation to make representations to the department ahead of the Budget. Such representations need to be made by 1 February 2023.

With business groups and other organisations asking for more financial help with the cost of living and heating bills, we can expect to hear further announcements on these issues, but we can also hope to hear from the Chancellor on what further measures he has to help industry grow through tax incentives and reduced red tape.

The ongoing conflict in Ukraine, high inflation and continuing unrest in the public sector over pay negotiations will mean Hunt has to tread a careful line around economic and political uncertainties.

Fuel duty

Rishi Sunak has refused to rule out an increase in fuel duty after being challenged over the Economic & Fiscal Outlook report from the Office for Budget Responsibility that there is a planned 23% increase in the fuel duty rate in late-March 2023. The OBR report says at para 61: 

"This would be a record cash increase, and the first time any Government has raised fuel duty rates in cash terms since 1 January 2011. It is expected to raise the price of petrol and diesel by around 12 pence a litre." 

Treasury committee Chair, Harriett Baldwin, told the Prime Minister that a better approach to fuel duty was needed from the government. However, Mr Sunak said he could not pre-empt Chancellor Jeremy Hunt's Budget on 15 March.

A "slimmed-down" Budget?

Leaked in the media is the suggestion that Jeremy Hunt's Spring Budget will be a "slimmed-down" affair, with no tax cuts proposed. This, despite a likely general election in 2024.

"Treasury insiders told the Guardian the chancellor was not expected to announce any tax cuts in his fiscal statement this March as his focus was wholly on getting the economy back on a steady footing and the public finances were tight."

So maybe we should not be too hopeful that the Spring Budget will bring some tax relief to enjoy?

Interest rates

Andrew Bailey, Governor of the Bank of England, predicts that interest rates are likely to peak at around 4.5%, and there will be a “long but shallow” recession.

Chancellor's Autumn Statement 17 November 2022

Download:

• Autumn Statement 2022 Full summary
• Revised Tax tables for 2022/23
• Autumn Statement webinar 
• Autumn Finance Bill 2022

NOTE: Finance Act 2023 received Royal Assent on 10 January 2023. It was originally entitled ‘Finance (No 2) Bill 2022’.

A further Finance Bill, covering draft measures published in July 2022, will be published following the Budget Statement on 15 March 2023.

Further information

If you would like to discuss how the Autumn Statement and the forthcoming Spring Budget may affect you and/or your business, please contact your usual Bishop Fleming advisor.