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Jeremy Hunt's 'back to work' Budget boost for old and young - as UK to avoid recession this year
15 March 2023, 12:46 | Updated: 15 March 2023, 19:08
The UK's economy is 'proving the doubters wrong,' Jeremy Hunt told MPs as he delivered his Spring Budget and announced support for working parents and pensioners.
In a boost for people with young children or those looking to start a family, the Chancellor announced 30 hours of free childcare per week for all children older than nine months.
Mr Hunt also said he would increase the pensions annual tax-free allowance from £40,000 to £60,000 and will abolish the Lifetime Allowance - previously set at £1.07m.
- 30 hours of free childcare per week for all children older than nine months.
- Pensions annual tax-free allowance increased from £40,000 to £60,000
- Pension lifetime allowance previously set at £1.07m abolished
- UK to avoid ‘technical recession’ this year
- Inflation to drop from 10.7 per cent to 2.9 per cent by end of 2023
- Energy Price Guarantee will remain at £2,500 for next three months - saving families £160
- Alcohol duty freeze continues until August 1 and pints to be cheaper - duty on draught products in pubs 11p lower than supermarkets
- Fuel duty frozen for the next 12 months
- 12 new Investment Zones confirmed - ‘12 potential Canary Wharfs'
- Potholes Fund boosted by £200m
But Sir Keir Starmer accused the chancellor of "dressing up stagnation as stability" and putting the country "on a path of managed decline".
He said Britain is facing a "year of stagnation and "non-existent" growth. Sir Keir accused the chancellor of resorting to "classic short-term sticking plasters" and ducking problems today resulting in "pain for working people tomorrow".
He said the chancellor's announcements "are nowhere near the mark".
The Institute for Fiscal Studies (IFS) director Paul Johnson said the Chancellor is missing a "serious long term strategy" on pension tax policy.
"'Listened to concerns of senior NHS clinicians' says Mr Hunt," he tweeted.
"Changing pension tax relief as a result. Should have changed NHS (and other public sector) pension schemes. Sledgehammer to crack a nut.
"There is a case for raising annual and lifetime allowances - reversing last 13 years of policy. But won't have much effect on employment. And damaging and complex tapering system remains.
"Pension tax policy needs a serious long term strategy. Such a strategy completely missing."
Mr Hunt confirmed the Energy Price Guarantee will remain at £2,500 for the typical household for the next three months, saving families a further £160 on top of the support measures already announced.
The Chancellor said: "We remain vigilant, and will not hesitate to take whatever steps are necessary for economic stability. Today the Office for Budget Responsibility forecast that because of changing international factors and the measures I take, the UK will not now enter a technical recession this year.
"They forecast we will meet the Prime Minister's priorities to halve inflation, reduce debt and get the economy growing. We are following the plan and the plan is working. But that's not all we've done."
Mr Hunt highlighted cost-of-living support, adding: "Today, we deliver the next part of our plan. A Budget for growth.
"Not just the growth that comes when you emerge from a downturn, but long-term, sustainable, healthy growth that pays for our NHS and schools, finds jobs for young people, and provides a safety net for older people all whilst making our country one of the most prosperous in the world. Prosperity with a purpose."
He said he planned to "remove obstacles that stop businesses investing".
Jeremy Hunt elicits laughter in the Commons after declaring he would 'freeze' duty on British Ale
He said he wanted to tackle labour shortages that stop firms from recruiting; break down barriers that stop people working; and harness British ingenuity to make us a science and technology superpower.
The UK economy is set to avoid a recession and inflation is on track to fall to 2.9% by the end of the year, according to the fiscal watchdog the Office for Budget Responsibility (OBR).
It has forecast an "improved outlook" for public finances, the Chancellor told MPs in the House of Commons during his Budget announcement.
It comes after the OBR originally laid out a bleak outlook in November, which predicted ballooning debt and shrinking GDP in 2023.
However, falling wholesale energy prices and cooling inflation has helped to boost the position of the Treasury in recent months.
On Wednesday, the OBR indicated that inflation would reach 2.9% by the final quarter of 2023.
It comes after rocketing energy prices saw inflation strike 10.7% in the final quarter of last year.
Original forecasts had also indicated the economy would enter recession in 2022 and shrink by 1.4% in 2023. However, the fresh projections show that the economy is set to avoid a technical recession - which means two consecutive quarters of decline - and shrink by 0.2% this year as whole.
It is then due to grow by 1.8% in 2024 and 2.5% in the following year before growth cools.
Chancellor Jeremy Hunt said: "Today the Office for Budget Responsibility forecast that because of changing international factors and the measures I take, the UK will not now enter a technical recession this year.
"They forecast we will meet the Prime Minister's priorities to halve inflation, reduce debt and get the economy growing."