UK Chancellor of the Exchequer Rishi Sunak delivered his spring statement on Wednesday as he seeks to navigate Britain out of a cost-of-living crisis triggered by rising inflation and Russia's invasion of Ukraine.
Speaking in parliament, Mr Sunak announced a slew of measures to reduce the fiscal burden on British families, including a cut to fuel duty and a future drop in the rate of income tax.
There were also a number of other giveaways for businesses and employees, potentially easing the strain on finances for the lowest paid. Here's what was outlined in the chancellor's speech:
— Mr Sunak said by the end of the current parliament in 2024, the government would cut the basic rate of income tax from 20p in the pound to 19p, which he said was “fully costed and fully paid for in the plans announced today”.
— The Chancellor said he would “stand by” households, and announced fuel duty would be cut by 5p per litre for a year until March 2023.
— Mr Sunak said that “thanks to Brexit” he was able to remove VAT on materials such as solar panels, heat pumps and insulation to help bring down energy costs, as well as on wind and water turbines. He told the Commons: “We will abolish all the red tape imposed on us by the EU.”
— He also said he is doubling the Household Support Fund to £1 billion ($1.32bn) “to do more to help our most vulnerable households with rising costs” with “targeted support”.
— The Chancellor said he would publish a “tax plan” as he announced that the national insurance contributions (Nics) threshold would rise by £3,000 “to fully equalise the Nics and income tax thresholds not incrementally over many years but in one go this year”.
— Hoping to prompt a new “culture of enterprise”, Mr Sunak said there would be tax cuts “on business investment and innovation with final decisions to be announced in the autumn Budget”, and a reform of research and development tax credits.
— The employment allowance for small businesses will rise to £5,000.
— Mr Sunak focused on “security”, linking having a strong economy to standing up to Russian President Vladimir Putin over his invasion of Ukraine. He said what underpins the security enjoyed in the UK was “the strength of our economy” which he said the government has a “moral responsibility” to use to support Ukraine.
— He warned, however that sanctions on Russia “of unprecedented scale and scope” would have an impact on the economy, saying they “are not cost-free for us at home” and present “a risk to our recovery”.
— He told the Commons that the Office for Budget Responsibility has downgraded its UK growth forecast for this year to 3.8 per cent.
— But Mr Sunak said downgraded growth forecasts had “not affected our strong jobs performance” as he said unemployment was back to levels seen before the pandemic.
— The government is “meeting all our fiscal rules”, Mr Sunak said, but the nation must prepare for “the economy and public finances to worsen, potentially significantly” following Russia’s invasion of Ukraine.
— The cost of borrowing is set to continue to rise. The Chancellor said £83 billion will be spent on debt interest, “the highest on record and almost four times the amount we spent last year”.
— Mr Sunak said underlying debt is expected to fall steadily from 83.5 per cent of GDP in 2022/23 to 79.8 per cent in 2026/27. He added borrowing as a percentage of GDP is likely to 5.4 per cent this year, 3.9 per cent next year, then 1.9 per cent, 1.3 per cent, 1.2 per cent and 1.1 per cent in the following years.