On March 15th, Jeremy Hunt, who serves as the Chancellor of the Exchequer, unveiled his Spring Budget for 2023 to Parliament.
Hunt has outlined his tax and spending proposals for the coming years, including everything from assistance with energy bills, childcare, and fuel costs to decisions on corporate tax and pensions.
In this week’s blog, we’re exploring the impact the Spring Budget will have on property, retail, hospitality, and asset management.
The Chancellor declared that the government will “meet the Prime Minister’s priorities to halve inflation, reduce debt, and get the economy growing”. It was also announced that the Office for Budget Responsibility (OBR) now forecasts that the UK will not enter a technical recession this year.
In fact, UK inflation is anticipated to fall from 10.7% in the final quarter of last year to 2.9% by the end of 2023. Despite this, Mr Hunt warned of “continuing global instability”.
Energy help extended
The Chancellor said that he will postpone raising the energy price guarantee for the next three months, keeping the annual ceiling on average home bills at roughly £2,500 rather than the projected increase to £3,000 per year.
Through the guarantee, the government essentially makes up the difference between what households are paying and the cost of buying energy from wholesale markets. By reducing the pressure on household budgets, many will have disposable income thereby boosting retail spending.
Additionally, Hunt announced that he intends to allocate a fund of £63 million to help public leisure centres and pools in the face of elevated expenses. He also revealed that £100 million will be given to assist numerous charities and community organisations.
12 new investment zones were also announced in the Spring Budget. Located in the West Midlands, Greater Manchester, the Northeast, South Yorkshire, West Yorkshire, East Midlands, Teesside and Liverpool – the Chancellor asserts that each has the potential to be new ‘Canary Wharfs’.
Over a five-year period, each English investment zone will receive £80 million. The investment zone plan can be modified by local governments and research institutions to suit local needs.
The zones will also have access to a single 5 year tax offer mirroring Freeports. However, in order for areas to access investment, they will need to show that the zone will ‘support the UK reaching net zero by 2050.’
Corporation tax will be increased from 19% to 25% from April, however, Hunt insisted that only 10% of businesses will pay the full rate. The Chancellor also revealed that every pound spent on IT equipment, plant and machinery can be deducted in full and immediately from taxable profits for the next three years.
This will equate to a corporation tax cut worth £9bn a year. The OBR predicts the initiative will increase business investment by 3% each year.
Alcohol and tobacco
From August, alcohol duty rates will rise 10.1% in line with the Retail Price Index, but pubs will be shielded from the impact of this. A ‘Brexit Pubs Guarantee’ will ensure that draught beer in pubs will be 11p cheaper than beer in supermarkets. It is hoped that this will support the struggling hospitality sector with pubs and restaurants set to benefit.
At Targetfollow, we welcome the measures announced by the Treasury. The extension of the energy help will be encouraging news for individuals and businesses, and investing in specific zones will also help facilitate national re-invention.
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