LONDON (Reuters) - British finance minister Jeremy Hunt announced on Wednesday cuts to personal taxation and efforts to boost business investment in a bid to speed up the country's sluggish economy ahead of an election expected next year.
Below are the key announcements:
GROWTH FORECASTS
The Office for Budget Responsibility (OBR) said it expected the economy to grow by 0.7% in 2024, sharply down from the 1.8% it had forecast in March.
It forecast 1.4% growth in 2025 and 1.9% in 2026, compared with previous forecasts of 2.5% and 2.1% respectively.
DEBT FORECASTS
The OBR forecast underlying debt will be 91.6% of GDP next year, 92.7% in 2024-25, 93.2% in 2026-27, before declining in the final two years of the forecast to 92.8% in 2028-29.
BUSINESS INCENTIVES
Hunt said a full-expensing scheme designed to spur business investment would be made permanent, and not end in 2026 as previously expected. Under the scheme, for every pound a company invests, their taxes are cut by up to 25 pence.
Hunt said it costs 11 billion pounds ($13.7 billion) a year. Companies had called for it to be made permanent to help boost productivity.
FDI REVIEW
The government will set up a concierge service for large international investors after it accepted the recommendations of a review into how the country can increase the amount of Foreign Direct Investment projects it attracts.
NATIONAL INSURANCE
Hunt said he would cut the main rate of employee national insurance by a bigger-than-expected 2 percentage points. He said it would help 27 million people and was designed to attract more people into work.
PENSION RISES
The government recommitted to its so-called Triple Lock for pensioners, where it uprates the state pension every year by the highest of earnings growth, inflation or 2.5%. Hunt says the policy has lifted 250,000 older people out of poverty since it was introduced in 2011.
From April 2024, we will increase the full new state pension by 8.5%.
NATWEST RETAIL SALE
Hunt said the government would explore options for a Natwest (LON:NWG) retail share offer in the next 12 months subject to supportive market conditions and achieving value for money.
SPEEDING UP ENERGY CONNECTIONS
Britain announced plans to speed up the process for new electricity projects connecting to the country’s power grid and to reward communities near new infrastructure. In budget documents, it said it would aim to reduce overall connection delays from five years to no more than six months.
TAX CUTS FOR SELF-EMPLOYED
Hunt abolished Class 2 National Insurance, saving the average self-employed person 192 pounds per year, and announced a 1 percentage point cut to the rate of Class 4 National Insurance.
BUSINESS RATES
Hunt disappointed major retailers by not addressing what they see as the unfairness of the business rates system. Instead, he said the standard multiplier - the rate at which a business is taxed based on a property’s rateable value - will rise in line with inflation.