Jeremy Hunt presents the 2024 UK budget before the elections dated late this year.
Jeremy Hunt, the Chancellor of the Exchequer, unveiled budget 2024 in a highly anticipated financial update. In his opening remarks, Hunt acknowledged the challenges the UK economy has faced including the financial crisis, the pandemic, and the energy crisis sparked by conflicts in Europe.
Despite these hurdles, he expressed confidence in the nation’s ability to navigate through these difficulties, stating that interest rates, although high, are being managed as inflation is brought down.
Hunt emphasizes that the Budget aims to not only provide cost-of-living support but also implement permanent cuts in taxation and farming as it has a blueprint for long-term economic growth. Many conservative MPs had hoped for a headline-grabbing budget that would finally leave people feeling better off and help to close the gap with labor in the polls, acting as a launchpad for the election later this year.
One of the headline announcements was the reduction in national insurance contributions, with the rate set to drop from 10% – 8% of pay starting in April. This follows a previous cut of 2p in the autumn statement last November, lowering the rate from 12% to 10%. Hunt revealed that the long-term ambition is to further reduce this rate when feasible.
Regarding economic growth, Hunt projected GDP growth of 0.8% for the current year and 1.9% in 2025, slightly exceeding the previous forecasts from the Office for Budget Responsibility. However, growth rates are expected to taper off in the following years, raising concerns among Tory MPs facing potential electoral challenges.
On the inflation front, Hunt provided a glimmer of hope, stating that inflation is expected to fall below the government’s 2% target in the coming months, down from 4% in January. This decline is attributed to easing food and energy pricing offering a rare political win for the government.
In terms of government borrowing, Hunt highlighted a downward trajectory, with underlying debt expected to decrease from 91.7% of GDP in 2024-25 to 92.9% in 2028-29. Borrowing is also projected to decline, reaching its lowest level of GDP since 2001 by the end of the forecast period.
Chancellor maintained a 1% increase in day-to-day public spending above inflation, contrary to speculations of a potential cut to just 0.75% additionally, he outlined plans to increase military spending to 2.5% of GDP once economic conditions permit, up from the current 2%.
In terms of healthcare, Hunt unveiled a comprehensive productivity plan for the first NHS emphasizing the adaptation of AI to reduce administrative burdens on healthcare professionals, digitalization of hospital processes, and enhancements to the NHS application.
He expressed a desire for this groundbreaking agreement with the NHS to serve as a model for other public services, including education, law enforcement, and government operations.
Furthermore, Hunt announced a constitution on child benefit rules, proposing to apply it to collective household incomes from April 2026, with adjustments to income thresholds. Additionally, he extended the household support fund, originally introduced in 2021, by six months to aid families grappling with the cost of living.
In taxation reforms, Hunt confirmed plans to abolish the non-domiciled tax status and replace it with broader efforts to enhance tax fairness. He also announced a reduction in property capital gains tax rates and the elimination of stamp duty relief for buyers acquiring multiple dwellings.
The spokesman also focused mostly on Childcare, Holiday rental properties, Tobacco duty, and investments in the arts, including funding for the National Theatre’s stage upgrades and tax credits for independent films. Along with measures to support small businesses, including adjustments to VAT thresholds and plans for the government to sell shares in NatWest Bank.
These measures, though varying in scale and scope, collectively reflect the government’s effort to navigate economic challenges, promote productivity, and support key sectors and industries in the UK.
However, amidst these announcements, Hunt’s Budget presentation was not devoid of political undertones. He took the opportunity to critique labor’s spending plans and highlight the Conservative Party’s fiscal discipline, especially as the country heads into an election year.
As the budget for 2024 unfolds, the implications of these fiscal measures will undoubtedly shape the economic landscape and political discourse in the months to come. The budget 2024 was cautioned to be a “prudent and responsible” budget considering the economic recession of Britain.
However, living standards remain squeezed and millions of people face being dragged into higher tax bands, while the Office for Budget Responsibility (OBR) showed that the incomes will be general election, in 2019, at the end of this parliament.