At 12:30pm on Wednesday 6 March, Chancellor Jeremy Hunt will deliver the Spring Budget 2024 – a mere three and a half months after his autumn statement.
This budget holds significant weight, being the last fiscal event before the upcoming general election later this year. To win over voters, it’s likely that the Chancellor will pull out all stops and introduce financial policy that takes full advantage of the country’s economic momentum.
In this week’s blog, we’re exploring what potential policy changes could be included in the 2024 Spring Budget.
Building on momentum
Despite recent economic challenges, there is a sense of optimism in various industries. One promising indicator is the surge in new businesses entering the market. According to data from the Office for National Statistics (ONS), business incorporations in 2023 showed a notable increase, with the last quarter of the year witnessing over 50,000 more incorporations than dissolutions.
From these figures, it’s clear that the entrepreneurial spirit is thriving, and it is imperative for the government to sustain this momentum. The Spring Budget needs to recognise that small and medium-sized enterprises (SMEs) are pivotal to economic growth.
Encouraging consumer spending
Alongside the introduction of measures that affect businesses directly, firms that trade directly to consumers are eagerly awaiting announcements in the Spring Statement that could revitalise spending. Over the past few years, rising interest rates, inflation and elevated fuel costs have dampened consumer spending – contributing to a dip in economic growth towards the end of 2023.
In November 2023, the Chancellor reduced the main rate of National Insurance which increased workers’ take-home pay – creating a potential boost to the revenue streams of the hospitality and retail sectors. In the 2008 financial crisis, various steps were taken to increase consumer spending – including a temporary reduction in VAT. With this in mind, could we see more income tax reductions in the Spring Budget?
A positive inflation outlook
The Office for Budget Responsibility’s forecasts are speculative, but the current inflation rate of 4%, significantly lower than the previous year, provides hope. With inflation believed to be on a downward trend, there is growing optimism that interest rates will continue to fall. Regardless of the imminent election – low inflation and interest rates could contribute positively to the economic sentiment. Optimism is of course, fundamental to economic strength.
Targetfollow
As we await the Spring Budget, Targetfollow will be keenly observing the policy decisions that will shape the economic landscape in the months to come. A focus on sustaining the country’s entrepreneurial spirit, assisting consumer spending and a positive announcement regarding inflation could potentially help the United Kingdom economically as it emerges from a mild recession.
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