Commentary: Check the fine print and Hunt’s Budget 'looks a bit less impressive'

15 March 2023, 14:50 | Updated: 15 March 2023, 15:16

Hunt's Budget 'a bit less impressive' when the fine print is checked
Hunt's Budget 'a bit less impressive' when the fine print is checked. Picture: Getty

By Douglas McWilliams

The Chancellor’s budget was well delivered and obtained a rousing reception (from his own side) in the House of Commons.

We’ve now had a chance to read the supporting documents and it looks a bit less impressive.

What appeared to be quite an expensive and carefully worked out programme to bring people back into the labour force, with child care measures alone costing over £5 billion a year, is estimated by the OBR only to boost the labour force by 110,000 in total.

The world class investment allowance regime announced in the Budget is only expected to boost investment by 3½ % (lower than Cebr’s estimate of about 5%.)

Read more: Jeremy Hunt's 'back to work' Budget boost for old and young - as UK to avoid recession this year

Read more: What the budget means for you

The good news is that the economy is set to avoid recession this year on the OBR forecasts - if only by the skin of its teeth with GDP overall for the year still down by 0.2%.

Somewhat implausibly, growth returns at an annual average rate of close to 2% thereafter. Since it has actually declined in size since pre-pandemic with unemployment remaining stubbornly below 4%, the Chancellor seems to be betting on a miracle.

We suspect the OBR is overoptimistic about both getting growth up and inflation, which is expected to fall back to target level next year, down.

In the circumstances, although we give the Chancellor bonus points for trying to reboot the labour supply, he seems to have flunked his other challenge, which is bringing public spending into line with the country’s sluggish GDP prospects.

Income taxes are rising as a result of stealthy freezing of tax allowances.

Capital gains allowances are being cut. And the rate of corporation tax for 90% of the economy rises by a third from 19% to 25% in April.

This mainly is paying for a public sector where productivity has fallen by over 6% since before the pandemic and where many benefits make it uneconomic for people to work.

With an economy currently flatlining, it is doubtful if the spending plans embodied in the budget are affordable.

One suspects that whoever is Chancellor next year or the year after will have a problem on his or her hands.

Douglas McWilliams is Deputy Chairman of Cebr, the economics think tank

More Latest News

See more More Latest News

South African president Cyril Ramaphosa meets senior officials of his African National Congress party

South African parties cobble together unity government before electing president

Nigel Farage says Germans should 'get a sense of humour' amid calls for football fans who chant 'Ten German Bombers' to be prosecuted

Nigel Farage says Germans need to 'get a sense of humour' if football fans sing Ten German Bombers chant

Farage says he’d lead a 'centre-right' party to could stand against Labour… as he blames Cameron and Osborne for turning the Tories socialist democrat party

Nigel Farage reveals he would be lead a Conservative-Reform merged party

Nigel Farage in the LBC studio today and (right) on the Reform UK campaign bus in Barnsley, South Yorkshire this week

'This is how ordinary people speak': Farage defends Reform UK candidates after anti-Islam and far-right comments exposed

Reform UK candidate Steve Chilcott said ‘Islam and Nazis are the same thing’ in comments in 2017

Reform candidate rants that ‘Islam and Nazis are the same thing’ in unearthed footage

'PM’s don’t always get decisions right': David Cameron defends Rishi Sunak’s handling of D-Day commemorations

'PM’s don’t always get decisions right': David Cameron defends Rishi Sunak’s handling of D-Day commemorations

Nigel Farage said he would not surrender to the 'mob'

'I'm not going to surrender to the mob': Farage blames ‘angry left’ and social media after milkshake attacks

Reform UK leader Nigel Farage during LBC's, Nick Ferrari at Breakfast show at Global in Leicester Square, London, while on the General Election campaign trail. Picture date: Thursday June 13, 2024.

General Election LIVE: Farage defends Reform candidates after anti-Islam and far-right comments exposed, Labour set to launch manifesto

A patient being treated for prostate cancer on the NHS

Over 380,000 cancer patients have faced delays since 2015, as NHS last met treatment time target over 8 years ago

Wayne Lineker has broken his silence after the attack

Wayne Lineker, 62, breaks silence with birthday message to son after being knocked out by single punch in Ibiza brawl

Musk SpaceX Lawsuit

Fired SpaceX employees sue company for wrongfully firing critics of Elon Musk

Former Spandau Ballet singer Ross Davidson has appeared in court accused of rape

Ex-Spandau Ballet singer accused of filming himself raping women while they slept

Argentina Congress

Senators approve president’s bills after violent protests in Argentina

Jonathan Collins and Neil Moon

Mystery as two pest control workers found dead with frozen faces and hands in crawl space of chicken factory

Both teacher have now resigned

Two teachers resign after ‘offering foursome' and sharing lingerie pics with student on school trip

Labour has pledged to be the party of 'wealth creation'

Labour Party promises 'wealth creation' will be 'number one priority' in election manifesto