Chancellor Jeremy Hunt is to spend about £3 bn in his March 15 Budget to shield UK households from higher energy bills, but new economic forecasts mean he will have little room for big giveaways.
The chancellor has been handed draft forecasts by the UK fiscal watchdog showing the economy will barely meet his fiscal rule to have public debt as a share of output falling in five years’ time.
This prediction has severely impaired Hunt’s ability to consider Conservative MPs’ demands for big and immediate tax cuts in the Budget. But Hunt has urged Tory MPs to be patient and says he hopes to start the process of tax cuts, particularly for business, in his Autumn Statement, by which point he hopes to have a better outlook for the public finances.”
We were hoping recent positive economic news would give us extra room for manoeuvre this time, but it hasn’t quite happened,” said one government insider.
Hunt has secured an unexpected £30 bn windfall in the public finances, partly from higher than anticipated tax receipts in 2022-23, and this means he can provide some one-off help to households in the Budget.