The economy is turning a corner, with inflation expected to fall to its 2% target in the next quarter, wages consistently rising faster than prices and the UK experiencing better growth than its European neighbours, said Jeremy Hunt in his Spring Budget.
This was a budget that focused on lower taxes, better public services and more investment.
‘Lower taxes mean higher growth, which means more opportunity, more prosperity and more funding for our public services,’ said Hunt.
Inflation on track to hit 2%
Inflation is now on track to meet its 2% target in the next quarter, which may bode well for mortgage rates in the coming months.
‘When the Prime Minister and I came to office, inflation was running at 11%,' said Hunt. 'The latest figures show it is now at 4%, more than meeting our pledge to halve it last year.
‘Today’s forecast shows it falling below the 2% target in just a few months' time, nearly a whole year earlier than we announced in the autumn statement. That didn’t happen by accident.’
National Insurance cut by another 2p per pound
From April 6, employee National Insurance contributions will be cut by another 2p, taking them from 10% to 8% and saving £450-a-year for the average employee.
‘The way we tax people’s income is particularly unfair,’ said Hunt. ‘We have two types of taxation: National Insurance and Income tax and this penalises work instead of encouraging it.'
National Insurance for self-employed workers will also be cut from 8% to 6%, saving around £350 a year.
‘The cuts mean the average UK earner now has the lowest personal tax rate since 1975,’ said Hunt. ‘Our taxes are now lower than the United States, France, Germany or any G7 country, because making work pay is important.’
Fuel duty frozen for 12 months
‘If I did nothing fuel duty would increase by 13% this month,’ said Hunt.
‘I have decided to maintain the 5p cut and freeze fuel duty for another 12 months. This will save the average car driver £50 next year and bring total savings to £250.'
The move will also reduce headline inflation by 0.2%, allowing the government to make faster progress towards the Bank of England’s 2% inflation target.
Child benefit levels raised from £50,000 to £60,000
The High Income Child Benefit Charge is to be assessed on a household-basis by April 2026, as Hunt labelled the current system ‘confusing and unfair’.
Currently if one parent earns more than £50,000, the household can no longer receive child benefit. However if two parents earn £49,000 each, the household can still receive child benefit.
From April 2026, the child benefit assessment will measure the combined earnings of both parents together.
And from this April, the high income level will be raised from £50k to £60K, with the top of the taper at which it is withdrawn raised to £80,000.
The move means nearly 500k families will save an average of £1300 next year.
Cigarettes and alcohol
In the Chancellor’s autumn statement, alcohol duty was frozen until August this year. This has now been extended until February 2025, which the Chancellor says will benefit 38,000 pubs across the UK.
‘We value our hospitality industry and are backing the great British pub,’ said Hunt.
Meanwhile, a duty on vapes will be introduced from October 2026 to protect young people and children from the harm of vaping, alongside a one-off increase in tobacco duty to recognise the role vapes play in helping people to quit smoking.
The cost of a packet of cigarettes will top £16 after today’s budget.
Support measures for vulnerable families
Repayment period for budgeting advance loans extended from 12 months to 24 months
In his Autumn Statement, Hunt abolished the higher rate charges for electricity on pre payment meters.
In today’s budget, his focus was on debt and helping the nearly one million households on Universal Credit who take out budgeting advance loans, in order to pay for more expensive emergencies like boiler repairs or help getting a job.
The repayment period for these loans will now be increased from 12 months to 24 months, in a move that was welcomed by Money Saving Expert's Martin Lewis.
Debt relief order costs abolished
For some people the best way to resolve debt is through a debt relief order, which costs £90, deterring those who need them the most.
‘Today I relieve pressure on 40K families a year by abolishing the charge completely,’ said Hunt.
Housing support fund to be continued for 6 months
With the battle against inflation still not over, the housing support fund will continue at its current levels for another 6 months.