Budget 2023: UK economy will avoid recession in 2023 and inflation set to plummet, says chancellor
Jeremy Hunt said the British economy is “proving the doubters wrong” and will avoid recession, as he delivered his first full budget speech to Parliament.
The chancellor said the government’s plan for the economy was “working” as he announced what he called a “budget for growth”.
He said forecasts from the Office for Budget Responsibility (OBR) showed the UK would avoid recession – two-quarters of negative growth – in 2023, despite previous predictions.
But the economy will still contract overall this year by 0.2%, and the OBR has warned living standards are still expected to fall by the largest amount since records began – although the decline is not as bad as had been forecast in November.
Budget 2023 – read more:
Politics live: The budget as it happened and reaction
The key points of the budget at a glance
The OBR forecasts also said inflation in the UK would fall from 10.7% in the final quarter of last year to 2.9% by the end of 2023.
Mr Hunt said it showed Rishi Sunak’s goal of halving inflation this year would be met, but he added: “We remain vigilant and will not hesitate to take whatever steps are necessary for economic stability”.
However, Labour leader Sir Keir Starmer said the chancellor’s “boasts” about lower inflation were “ridiculous”, adding: “The idea that it’s a tax cut, British people can see through that.
“They see their tax burden at its highest level for 70 years and they know it’s not the government that’s lowering inflation.
“It’s working people, earning less, enjoying less. It’s their sacrifice that is helping to bring inflation down and they deserve better than another cheap trick from the government of gimmicks, making them pay whilst trying to claim the credit.”
Interest Rate Expectations
A number of other plans were unveiled by Mr Hunt, including:
• Bringing charges for prepayment meters in line with direct debit charges, impacting over four million households and saving them an average of £45 per year
• Making duty on draught products in pubs up to 11p lower than supermarkets
• Maintaining the freeze in fuel duty
The chancellor also said £11bn will be added to the defence budget over the next five years – following an announcement earlier this week – saying it would be nearly 2.25% of GDP by 2025. The government’s ambition is for it to reach 2.5%, he added.
And after reports he would increase the pensions lifetime allowance to £1.8m in an attempt to encourage doctors and other high earners back to work, Mr Hunt decided to scrap the limit entirely, as well as increasing the pensions annual tax-free allowance from £40,000 to £60,000.
He told the Commons: “In the face of enormous challenges I report today on a British economy which is proving the doubters wrong.
“In the autumn we took difficult decisions to deliver stability and sound money. Since mid-October, 10-year gilt rates have fallen, debt servicing costs are down, mortgage rates are lower and inflation has peaked.
“The International Monetary Fund says our approach means the UK economy is on the right track.”
But Sir Keir said the only permanent tax cut in the budget was for “the richest 1%”, adding: “How can that possibly be a priority for this government?”
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‘This a failure you can measure not just in the figures but in the empty pockets of working people,’ says the Labour leader.
The Labour leader continued: “Again we see a failure to grip the long-term challenges. No determination to create growth that unlocks the potential of the many – working people being made to pay for Tory choices and Tory mistakes.”
Some policies were revealed ahead of the chancellor’s speech, including keeping the cap on energy prices at £2,500 for a further three months, despite a planned rise to £3,000 in April, and 12 new investment zones.
Sky News also reported last night his promise to provide 30 hours of childcare a week to parents of one and two-year-olds, and to give a further cash injection to the sector to increase the availability of existing free childcare for three to four-year-olds.
But Mr Hunt went further on this measure, saying the care would be available from September 2024 when a child reaches nine months, as well as promising to increase funding for nurseries and pay those on Universal Credit upfront for the childcare they need to get.
However, he also confirmed the ratio for how many children each staff member looks after can be raised from one per four to one per five – though he said it was optional for both providers and parents.
There were more announcements to fit with Mr Hunt’s “three E’s” philosophy – enterprise, employment and education.
They included:
• Incentive payments of up to £1,200 for childminders who sign up to the profession
• Enhanced credit for small and medium businesses, and creative firms
• An extension to relief for theatres, orchestras and museums
• Tax relief on energy efficient measures in firms
• £900m investment into supercomputing
The chancellor also confirmed widely reported plans to abolish the Work Capability Assessment for disabled people to “separate benefit entitlement from an individual’s ability to work”.
Mr Hunt promised a new programme called Universal Support, describing it as “a new, voluntary employment scheme for disabled people where the government will spend up to £4,000 per person to help them find appropriate jobs and put in place the support they need”.
And he said there would be a £400m fund to help those who are forced to leave work because of a health condition to get support in the workplace.
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Chancellor Jeremy Hunt MP has announced that the energy price guarantee will remain at £2,500 until the end of June.
Mr Hunt confirmed he would keep the incoming rise in corporation tax – from 19% to 25% – despite anger from some of his own backbenchers.
But in a bid to keep businesses happy, he introduced a new benefit where every pound a company invests in equipment can be deducted in full and immediately from taxable profits – “a corporation tax cut worth an average of £9bn a year for every year it is in place”.
In what appeared to echo recent Labour policy, the chancellor announced continued state-financed investment in nuclear power and the launch of Great British Nuclear, saying the public body will “bring down costs and provide opportunities across the nuclear supply chain to help provide up to one quarter of our electricity by 2050”.
And he said nuclear energy would be reclassified as “environmentally sustainable” to give it the same access to investment incentives as renewables.
Today’s statement was Mr Hunt’s first full budget as chancellor – having been brought in by Liz Truss to reverse a number of measures from her disastrous mini-budget last October and kept on by Rishi Sunak after he took over as prime minister.
It came against a backdrop of mass industrial action, with hundreds of thousands of workers today staging what is believed to be the biggest walkout since the current wave of unrest began.
Teachers, university lecturers, civil servants, junior doctors, London Underground drivers and BBC journalists are among those taking to picket lines around the country amid widespread anger over pay, job security, pensions and conditions.
Labour’s shadow chancellor, Rachel Reeves, said ahead of the budget that it was “an opportunity for the government to get us off their path of managed decline”.
She added, if her party were in power, their focus would be on securing the highest growth in the G7.
“Our plan will help us lead the pack again, by creating good jobs and productivity growth across every part of our country, so everyone, not just a few, feel better off,” she added.
Our politics, business and finance reporters will be hosting a Q&A after the budget statement. To submit a question, click here.
UK
More than 500 people arrested after Palestine Action protest – with almost half aged 60 and above
The number of people arrested after a protest in London on Saturday supporting banned group Palestine Action has risen to 532, police have said.
Around half of them (259) were aged 60 and above – including almost 100 people who were in their 70s.
Some 522 arrests were for displaying a placard in support of a proscribed organisation contrary to Section 13 of the Terrorism Act 2000, according to the Metropolitan Police.
As of 9pm on Saturday, the number was put at 466.
Membership of, or support for, Palestine Action is a criminal offence punishable by up to 14 years in prison under the Terrorism Act.
A rally supporting Palestine Action in Parliament Square. Pic: Reuters
One of the arrests took place as the Palestine Coalition march formed in Russell Square, while 521 were at the protest in Parliament Square.
Of those arrested, the biggest number (147) was in the 60-69 age group, while 97 people were aged between 70 and 79, and 15 others were between 80-89.
Six were aged 17-19, sixty-five were in the 20-29 age group, 55 were aged 30-39, 45 were aged 40-49 and 89 were in the 50-59 age group.
The average age of those arrested was 54, while some 263 of those arrested were male, 261 were female and eight either defined themselves as non-binary or did not disclose their gender.
Among the arrests, six were for assaults on officers (none were seriously injured), one was for “obstructing a constable in the execution of his/her duty”, two were for breaching Section 14 Public Order Act conditions, and one was for a racially aggravated public order offence.
People attend the protest in central London. Pic: PA
Hundreds of people attended Saturday’s demonstration in Parliament Square, organised by Defend Our Juries, with the Metropolitan Police warning it would arrest anyone expressing support for Palestine Action.
Anyone who was arrested as part of the operation was taken to one of two prisoner processing points in the Westminster area.
Those whose details could be confirmed were released on bail to appear at a police station at a future date. They were given conditions not to attend future demonstrations related to Palestine Action.
Those who refused to provide their details at the prisoner processing points and those who were found to have been arrested while already on bail, were taken to one of a number of Met Police custody suites.
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Charity Amnesty International described the mass arrests under UK terrorism law as “deeply concerning”.
The crowd, sat on the grass inside Parliament Square, could be seen writing “I oppose genocide, I support Palestine Action” on white placards at 1pm, with the vast majority remaining silent.
Meanwhile on Sunday, hundreds of people joined a march on Downing Street to urge the release of those being held in Gaza by Palestinian militant group Hamas.
A scuffle broke out after at least two men shouted “Free Palestine” in front of the march.
One man was seen being bundled to the ground close to Trafalgar Square after being surrounded by around a dozen people.
Another man was seen being moved away by police officers after he began shouting.
Amnesty International says it is “deeply concerning” that police made 474 arrests during a Palestine Action demonstration in London.
Metropolitan Police said 466 were detained under the Terrorism Act for showing support for a banned group.
Eight more people were arrested for other offences, including five for assaulting officers.
The Met said it was the most arrests it’s made related to a single operation in at least the past decade.
Pic: PA
Organiser of the event, Defend Our Juries, earlier said up to 700 people were at the event in Parliament Square and claimed police were preparing for the “largest mass arrest in their history”.
The group said those arrested included former Guantanamo Bay detainee Moazzam Begg, NHS workers, quakers and a blind wheelchair user.
Amnesty International UK’s chief executive Sacha Deshmukh said in a statement: “The protesters in Parliament Square were not inciting violence and it is entirely disproportionate to the point of absurdity to be treating them as terrorists.
“Instead of criminalising peaceful demonstrators, the government should be focusing on taking immediate and unequivocal action to put a stop to Israel’s genocide and ending any risk of UK complicity in it.”
The Met said a “significant number of people” at the event were seen “displaying placards expressing support for Palestine Action”.
Home Secretary Yvette Cooper said: “The right to protest is one we protect fiercely but this is very different from displaying support for this one specific and narrow, proscribed organisation.
“Palestine Action was proscribed based on strong security advice following serious attacks the group has committed, involving violence, significant injuries and extensive criminal damage.”
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Palestine Action supporters arrested at protest
Police said those arrested had been taken to processing points in Westminster and any whose details could be confirmed were bailed on condition they didn’t attend further Palestine Action support events.
Others whose details could not be verified, possibly because they refused to give them, were taken to custody suites across London.
Pic: PA
The protests have put a strain on authorities’ capacity to cope.
Sky News understands senior leaders in the prison service, known as “Capacity Gold”, met today to discuss how to deal with the large number of arrests as the male prison estate is close to full.
It’s understood 800 inmates were moved out of the busiest jails in and around London beforehand.
In a statement, the Metropolitan Police Federation said: “Thinking of our colleagues and wishing all assaulted officers well. Remember there are no ‘extra’ police officers – just the same ones having their days off cancelled, having to work longer shifts and being moved from other areas. Officers are emotionally and physically exhausted.”
Read more: What does proscribing a group mean?
Legislation to ban Palestine Action came into force on 5 July, making it a criminal offence to show support for the organisation, carrying a prison sentence of up to 14 years.
Defend Our Juries said earlier this week the protest would still go ahead, following several similar demonstrations since it was outlawed last month.
On Saturday, a spokesperson said: “Palestine Action and people holding cardboard signs present no danger to the public at large.”
Pic: PA
Human rights advocates Amnesty International described the arrests of so many people under UK terrorism law as “deeply concerning”.
Another march organised by the Palestine Coalition, which is a separate group, set off from Russell Square and assembled on Whitehall.
The Met Police said one person had been arrested there for showing a placard in support of Palestine Action.
Pic: Reuters
Earlier this week, three people charged as a result of illegal Palestine Action activity were named.
Jeremy Shippam, 71, of West Sussex, Judit Murray, also 71, of Surrey, and Fiona Maclean, 53, of Hackney in east London, will appear at Westminster Magistrates’ Court on 16 September.
The ban on Palestine Action faces a legal challenge in November after the High Court granted a full judicial review to Palestine Action co-founder Huda Ammori.
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