“With a wide range of measures to appeal to core voters, the Chancellor clearly had one eye on a future general election.
“In particular, the abolition of the lifetime allowance on pensions is an astonishing move, though it will remain to be seen whether this does get people back into the workforce.
“Announcements on quantum technology, AI and nuclear power seemed in places like a return to an industrial strategy, with a focus on growth and energy security.
“Longer-term economic challenges continue, and it was disappointing that there was no extra money to tackle the backlog at HMRC. Nevertheless, as an ‘experienced worker’ myself I think the Chancellor has made a good start in his new career in finance.”
Suren Thiru, Economics Director at ICAEW, said:
“The Chancellor’s focus on a budget for growth is the right one given a flatlining economy, and the number of measures announced will be a shot in the arm for businesses.
“The substantial investment in employment support and the expansion of free childcare should be applauded given the chronic staff shortages businesses continue to face. However, the reduced energy support for businesses will come as a blow to many who are facing large hikes in their bills.
“The new full expensing investment incentive will give firms confidence to invest and grow, though the uncertainty caused by the looming increase to corporation tax may undermine the stability needed for investment planning.
“With the OBR confirming that the longer-term outlook remains challenging, the acid test for this Spring Budget is whether it injects resilience into the economy and introduces a focus on renewal for the future.”
Alison Ring, Director of Public Sector at ICAEW, said:
“A slight improvement in the economic outlook has enabled the Chancellor to make some relatively small tax and spending commitments in today’s Budget, resulting in planned spending in 2023/24 of just under £1.2 trillion, only £10 billion lower than in November’s forecast.
“The public finances are still vulnerable to potential economic shocks, with limited headroom against the Chancellor’s objective of bringing down debt as a share of GDP. There is little capacity for flexibility if the economic situation deteriorates, or to provide additional funding for public services that are under pressure.”
Frank Haskew, Head of Taxation Strategy, ICAEW, said:
“Abolishing the Lifetime Pension Allowance is the biggest surprise to come out of today’s Budget, while the increase from £40,000 to £60,000 in the annual pension allowance is also significant. Together, these measures are forecast to cost over £1 billion by 2026/27. Although the Government is keen to encourage people back into the workplace, these measures are likely to appeal more to those who are still in work but considering retirement.
“The big-ticket capital allowance changes are also important and are aimed at driving capital investment to improve growth and productivity. With the increase in the main rate of corporation tax to 25% from April, and the ending of the 130% ‘super deduction’ allowance, the announcement that companies will instead be able to offset the full expense of all capital expenditure on plant and machinery means that the net cash benefit of capital investment will be maintained.
“The proposed creation of 12 new investment zones across the UK, with eight located in England, is a significant extension of freeport tax incentives which will encourage ‘high-potential knowledge-intensive growth clusters’, effectively creating a new type of investment zone based on a distinct geographical area.”
ENDS
Notes to editors:
Contact: ICAEW media office media.office@icaew.com, tom.mackintosh@icaew.com or 07866 853 841