Hunt promises to cut taxes and boost growth in pre-election Budget

Jeremy Hunt said tax cuts would offer “much needed help in challenging times” and stimulate economic growth as he set out Budget plans for pre-election giveaways.

The Chancellor, delivering a statement aimed at reviving both an ailing economy and reversing the Conservatives’ opinion poll deficit, said he was offering “permanent tax cuts” in a “Budget for long-term growth”.

Mr Hunt was set to make a 2p cut in national insurance the centrepiece of a tax-cutting Budget with an eye on this year’s general election.

Economic priorities

He told MPs: “Because we are delivering the Prime Minister’s economic priorities, we can now help families not just with temporary cost-of- living support but with permanent cuts in taxation.

“We do this to give much needed help in challenging times. But also because Conservatives know lower tax means higher growth.

“And higher growth means more opportunity, more prosperity and more funding for our precious public services.”

Inflation

Mr Hunt said inflation was set to fall to below the Bank of England’s 2% target “in a few months’ time”, easing the cost-of-living squeeze.

But he also set out a series of measures aimed at helping hard-pressed households, including:

– Freezing fuel duty and extending the “temporary” 5p cut for a further 12 months.

– A freeze in alcohol duty to February 1 2025.

– Extending the Household Support Fund with an extra £500 million.

GDP

Mr Hunt said gross domestic product (GDP) – a measure of the size of the economy – was also set to grow faster than previously forecast by the budget watchdog.

The Office for Budget Responsibility forecast growth of 0.8% in 2024, up from the 0.7% forecast in November, and 1.9% next year – up from 1.4% on the autumn forecast.

Growth was expected to be 2.2% in 2026, again higher than previously expected, 1.8% in 2027 – a 0.2 percentage point decrease – while the forecast for 2029 remained unchanged on 1.7%.

“Because we have turned the corner on inflation, we will soon turn the corner on growth,” Mr Hunt said.

For businesses, Mr Hunt increased the threshold at which small firms have to register for VAT from £85,000 to £90,000.

Investement 

He also announced measures aimed at supporting investment in tech firms by unlocking pension fund investment.

And he confirmed a new British ISA will allow an extra £5,000 of tax-free investment in UK assets.

The Chancellor also offered more than £1 billion in extra tax breaks for the creative industries over the next five years.

Mr Hunt updated MPs on investments by firms including AstraZeneca, which has plans to pump £650 million into facilities in Cambridge and Liverpool.