During the Spring Budget in March, the Chancellor presented the latest economic update from the Office for Budget Responsibility (OBR), saying the economy had “turned the corner on inflation” and “will soon turn the corner on growth.”
The latest forecast indicates the government is on track to meet its fiscal rules to grow the economy, reduce debt and halve inflation. The OBR expect that the UK economy will expand by 0.8% in 2024, and by 1.9% next year, higher than the 1.4% figure previously predicted. Government borrowing is expected to fall below 3% of GDP by 2025/26 and by the end of the forecast period it is due to represent the lowest level of annual borrowing since 2001.
In addition, the projections show the rate of inflation is expected to fall below the Bank of England’s 2% target level in “a few months’ time,” a year earlier than the OBR had forecast in the autumn.
Delivering what is likely to be his last Budget ahead of the much anticipated General Election, Jeremy Hunt highlighted a raft of reforms aimed at ensuring the tax system is simple, fair, keeps pace with economic developments, and supports public finances. The Chancellor said his policies would help build a “high wage, high skill economy” and deliver “more investment, more jobs, better public services and lower taxes.”
Together with some cost-of-living measures to help families struggling with extra financial pressures, key measures included a widely-anticipated reduction in National Insurance Contributions (NICs), abolition of the non-dom tax status and new savings products designed to encourage more people to invest in UK assets.
In order to promote more investment in UK assets, the government announced it would consult on the introduction of a UK Individual Savings Account (ISA) with a £5,000 annual allowance in addition to the existing ISA allowance of £20,000. If it goes ahead as planned, it will be a new tax-efficient savings product for people to invest in UK-focused assets. And a British Savings Bond will be delivered through National Savings & Investments (NS&I), offering a guaranteed interest rate, fixed for three years.
It is important to take professional advice before making any decision relating to your personal finances. Information within this article is based on our current understanding and can be subject to change without notice and the accuracy and completeness of the information cannot be guaranteed. It does not provide individual tailored investment advice and is for guidance only. Some rules may vary in different parts of the UK.