Chancellor Hunt announces UK budget to try to get the UK growing again

Whether it is enough to reinvigorate the UK economy ahead of the next election remains to be seen.

15 March 2023

The UK saw its first “grown-up” budget since the previous disastrous budget from former Chancellor Kwasi Kwarteng that shocked markets just five months ago. While this was always going to be more fiscally responsible, the unfortunate parallels in market distress are a little disturbing. This time, however, the mood change in risk sentiment is not Chancellor Jeremy Hunt’s fault, but instead a general sense of contagion risk spreading across the banking system.

Hunt’s first UK budget had to promise much to get the UK growing again and to give the Tories a glimmer of hope at the next general election. A “steady-as-she-goes” set of proposals saw a replacement of the previous Chancellor Sunak’s super-deduction tax relief to businesses, which expires in April, pushed out in a slightly changed but still business investment friendly format for the next three years.

The herculean task of tackling the UK’s curious labour inactivity saw support going to help disabled people find jobs. Over 50s are to be offered “return-ship” skills training, although it is dubious whether this will see great traction. Perhaps most surprisingly, Hunt announced an abolition of the pension lifetime allowance (rather than lifting it) which he hopes will see older workers defer retirement. Some modest support for childcare was as expected and all these carrots on a stick are designed to improve the inactivity in the labour market that has resulted post pandemic.

On balance, it was a relatively boring affair, with much already leaked ahead of today’s announcements, and that is probably what this government desired. Whether it is enough to reinvigorate the UK economy ahead of the next election remains to be seen.