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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.

More on Budget 2023:
Politics live: The budget as it happened and reaction

The key points of the budget at a glance

The forecaster said the drop would be lower than previously expected but that real households’ disposable income per person would still tumble 5.7% over the two financial years 2022-23 and 2023-24.

Households will therefore feel the pinch more than at any point since 1957, according to the OBR.

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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.”

Read more:
No big bangs, but there still could be blow ups: Beth Rigby’s political analysis
No feel-good factor: Ed Conway’s economic analysis

Interest Rate Expectations
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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.

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Hunt explains childcare delay

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”.

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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.

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Eco-tycoon Vince weighs sale of solar energy project

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Eco-tycoon Vince weighs sale of solar energy project

The energy group founded by Dale Vince, the eco-tycoon, is kicking off a hunt for investors in a solar park which is expected to become one of Britain’s biggest renewable energy projects.

Sky News understands that Ecotricity, Mr Vince’s company, has hired KPMG to explore talks with prospective investors or buyers for the project at Heckington Fen in Lincolnshire.

The development was approved by Ed Miliband, the energy secretary, earlier this year, and when completed it is expected to generate roughly 600MW of solar power.

It has been designated a Nationally Significant Infrastructure Project by the government.

Heckington Fen will also provide 400MW of battery storage capacity.

According to documents circulated to potential bidders, Ecotricity is prioritising the sale of 100% of the project, but is open to retaining a minority stake.

The company wants to complete a deal during the third quarter of the year.

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Responding to an enquiry from Sky News, Mr Vince said: “Heckington Fen is a fabulous opportunity; it’s also a massive one, possibly the biggest onshore renewable initiative in Britain.

“The project is shovel-ready with a grid connection in 2028 – something which is increasingly hard to find these days.

“Whilst this is a great project which is going to go ahead, the sums of money required to build this alone in a short timeframe, means we’re looking for investors or partners to help make this happen.”

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Sir Keir Starmer pledges to protect UK companies from Trump tariff ‘storm’

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Sir Keir Starmer pledges to protect UK companies from Trump tariff 'storm'

Sir Keir Starmer has said his government stands ready to use industrial policy to “shelter British business from the storm” after Donald Trump’s new 10% tariff kicked in.

The UK was among a number of countries hit with the lowest import duty rate following the president’s announcement on 2 April – which he called ‘Liberation Day’, while other nations, such as Vietnam, Cambodia and China face much higher US levies.

But a global trade war will hurt the UK’s open economy.

The prime minister said “these new times demand a new mentality”, after the 10% tax on British imports into America came into force on Saturday. A 25% US levy on all foreign car imports was introduced on Thursday.

It comes as Jaguar Land Rover announced it would “pause” shipments to the US for a month, as firms grapple with the new taxes.

On Saturday, the car manufacturer said it was working to “address the new trading terms” and was looking to “develop our mid to longer-term plans”.

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Jobs fears as Jaguar halts shipments

Referring to the tariffs, Sir Keir said “the immediate priority is to keep calm and fight for the best deal”.

Writing in The Sunday Telegraph, he said that in the coming days “we will turbocharge plans that will improve our domestic competitiveness”, adding: “We stand ready to use industrial policy to help shelter British business from the storm.”

It is believed a number of announcements could be made soon as ministers look to encourage growth.

NI contribution rate for employers goes up

From Sunday, the rate of employer NICs (national insurance contributions) increased from 13.8% to 15%.

At the same time, firms will also pay more because the government lowered the salary threshold at which companies start paying NICs from £9,100 to £5,000.

Also, the FTSE 100 of leading UK companies had its worst day of trading since the start of the pandemic on Friday, with banks among some of the firms to suffer the sharpest losses.

Sir Keir said: “This week, the government will do everything necessary to protect Britain’s national interest. Because when global economic sands are shifting, our laser focus on delivering for Britain will not. And these new times demand a new mentality.”

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Trump defiant despite markets

UK spared highest tariff rates

Some of the highest rates have been applied to “worst offender” countries including some in Southeast Asia. Imports from Cambodia will be subject to a 49% tariff, while those from Vietnam will face a 46% rate. Chinese goods will be hit with a 34% tariff.

Imports from France will have a 20% tariff, the rate which has been set for European Union nations. These will come into effect on 9 April.

Read more:
Red wall on Wall Street – but Trump undeterred
How will UK respond to Trump’s tariffs?

Sir Keir has been speaking to foreign leaders on the phone over the weekend, including French President Emmanuel Macron, Italian Prime Minister Giorgia Meloni and Australian Prime Minister Anthony Albanese, to discuss the tariff changes.

A Downing Street spokesperson said of the conversation between Sir Keir and Mr Macron: “They agreed that a trade war was in nobody’s interests but nothing should be off the table and that it was important to keep business updated on developments.

“The prime minister and president also shared their concerns about the global economic and security impact, particularly in Southeast Asia.”

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Trump’s warning

Mr Trump has warned Americans the tariffs “won’t be easy”, but urged them to “hang tough”.

In a post on his Truth Social platform, he said: “We are bringing back jobs and businesses like never before.

“Already, more than FIVE TRILLION DOLLARS OF INVESTMENT, and rising fast!

“THIS IS AN ECONOMIC REVOLUTION, AND WE WILL WIN. HANG TOUGH, it won’t be easy, but the end result will be historic.”

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Santander UK lines up ex-Treasury chief Scholar as new chair

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Santander UK lines up ex-Treasury chief Scholar as new chair

Sir Tom Scholar, the former top Treasury civil servant sacked by Liz Truss during her premiership, is being lined up as the next chairman of Santander UK, Britain’s fifth-biggest high street bank.

Sky News has learnt that Sir Tom, who played a pivotal role in the UK’s response to the 2008 financial crisis, is the leading candidate to replace William Vereker.

The appointment, which is subject to regulatory approval, could be announced later in the spring, according to insiders.

Sir Tom’s prospective recruitment comes amid a period of intense speculation about the future of Santander UK, which bulked up rapidly during the banking crisis by absorbing Alliance & Leicester and Bradford & Bingley.

The Spanish banking giant entered the British retail market in 2004 when it bought Abbey National, setting in motion a chain of dealmaking which would result in it becoming a serious challenger to Barclays, Lloyds Banking Group and NatWest Group.

If confirmed in the role, Sir Tom will follow a pattern of former senior public officials in taking on the chairmanship of Santander UK.

The post has been held in the past by Baroness Vadera, a Treasury minister during the 2008 meltdown, and Lord Burns, the former Treasury permanent secretary.

Sir Tom also held that latter role until his ousting during the shortlived Truss government, which led to him receiving a payoff of more than £350,000.

In addition to his position during the banking crisis, he was instrumental in devising the COVID-19 furlough scheme, which protected millions of private sector jobs during the series of lockdowns imposed on the British public.

He was widely respected among international banking regulators and finance ministers, and his sacking by Ms Truss sparked fury among senior civil servants.

Since leaving the Treasury, he has been appointed as chair of the European operations of Nomura, the Japanese bank.

At Santander UK, he will work closely with Mike Regnier, the former building society boss who has been its chief executive since 2022.

In recent months, there has been growing speculation that Santander UK’s parent is open to a sale of the business amid frustration about the scope and burden of British banking regulation.

Both Barclays and NatWest have been sounded out about a potential merger of their UK retail businesses with that of Santander UK, although formal talks have not progressed to a meaningful stage.

Ana Botin, Santander’s group executive chair, has appeared to publicly rule out a disposal, saying that the UK remains a “core market” for the group.

An attractively priced offer could yet gain Ms Botin’s attention, according to people close to the earlier talks.

One insider said, however, that Sir Tom’s recruitment was likely to dampen further speculation about a possible sale of the British business.

Shares in the Madrid-listed parent company, Banco Santander, have performed strongly in recent months, but fell by more than 8% on Friday as investors digested the fallout from President Donald Trump’s global tariffs blitz.

The company now has a market capitalisation of about €83.25bn (£70.7bn).

City sources said the search for Mr Vereker’s successor had been led by Heidrick & Struggles, the headhunter, in conjunction with Baroness Morgan, the former cabinet minister who sits on Santander UK’s board as its senior independent director.

This weekend, Santander UK said in a statement issued to Sky News: “Santander UK is conducting a thorough appointment process.

“The new chair will be announced once that process has concluded, including having obtained board and regulatory approval.”

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