Future Retirement Success
  • Politics
  • Business
  • Investing
  • Stocks
  • Politics
  • Business
  • Investing
  • Stocks

Future Retirement Success

Business

Poor outlook for growth could limit scope for budget tax cuts

by February 28, 2023
February 28, 2023
Poor outlook for growth could limit scope for budget tax cuts

A £30 billion boost to the government’s finances is likely to be wiped out by a downgrade in forecasts for economic growth at next month’s budget, a think tank has warned.

The Institute for Fiscal Studies said Jeremy Hunt would have limited room to announce giveaways at his first spring budget because of a lowering of Britain’s potential growth from the government’s fiscal watchdog.

The Treasury’s borrowing bill will be an estimated £31 billion lower this year, compared with forecasts made last autumn, thanks to a steep drop in global energy prices, lower payments on inflation-linked debt and strong tax revenues.

However, the think tank said the chancellor should resist calls to use the savings to fund tax cuts or spending rises in his first budget next month as the public finances would suffer from a slowing economy until 2027.

“All of what we are hearing about money being available in the short run doesn’t necessarily tell us about the money available in the long run, but it may help with some of the immediate crises,” Paul Johnson, its director, said.

The Office for Budget Responsibility is expected to slash its medium-term outlook for the economy to coincide with the budget on March 15. Last November, the watchdog published an optimistic set of forecasts that assumed the economy would bounce back strongly from a recession this year.

The institute said that the OBR was likely to raise its growth outlook for 2023, forecasting a much shallower recession than had been feared, but would lower its medium-term projection to paint a picture of a tepid recovery over the next five years.

This will hurt the chancellor’s prospects of meeting his self-imposed fiscal target to reduce the country’s debt-to-GDP ratio in the next five years and to balance day-to-day government spending over that period. The IFS said the official downgrade could result in Hunt missing the debt rule and putting borrowing on a “slightly rising path in five years’ time”.

“This judgment is extremely sensitive to the OBR’s assumptions about growth and inflation five years hence,” the think tank said. It would not be desirable for the government to take immediate policy action in response to a minor forecast change that puts it on track to miss the letter of its fiscal rules.” In November the OBR thought the economy would contract by 1.5 per cent this year, an estimate that is likely to fall to about 0.5 per cent to 0.7 per cent as falling energy prices help to cut inflation.

One area where Hunt is expected to spend is the extension of a cap on household energy bills at £2,500 a year. The cap was due to rise to £3,000 in April, but a sharp decline in market energy prices has made the subsidy cheaper for the Treasury and could mean it is maintained at the present level for the rest of the year.

The IFS said the Treasury has saved £10.9 billion on the subsidies compared with estimates made last November. These savings will be used in part to fund an expected £6 billion cut in fuel duty from April.

Read more:
Poor outlook for growth could limit scope for budget tax cuts

0
FacebookTwitterGoogle +Pinterest
previous post
Gary Lineker’s lawyers say HMRC tax inquiry ‘looking in the wrong place’
next post
Book Bodega of Ramsgate turns new page with Twitter SOS

You may also like

Claims firms rally for a PPI-style windfall as...

December 10, 2024

Midlands hit hardest in economic ‘perfect storm’

June 19, 2023

JD Wetherspoon to sell 39 more pubs as...

November 10, 2022

VodafoneThree pledges £11bn to bring 5G to every...

June 13, 2025

HSBC slashes costs by 8% in $1.5bn drive...

February 20, 2025

Made Smarter national roll-out to turbo charge Scotland’s...

November 23, 2023

Reviews of Top 4 Assignment Writing Service Websites...

February 26, 2024

Train drivers’ union Aslef announces more industrial action...

July 18, 2023

Business rates relief will give £14bn back to...

November 18, 2022

PR advice: Seeding a story is equally important...

September 23, 2022

    Get free access to all of the retirement secrets and income strategies from our experts! or Join The Exclusive Subscription Today And Get the Premium Articles Acess for Free

    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Recent Posts

    • Jill Biden’s ‘work husband’ runs for cover as privilege protection crumbles

      June 26, 2025
    • Poll: Majority of Republicans back Trump’s strikes on Iran; most Americans fear getting dragged into war

      June 25, 2025
    • Senate Republicans look to sweeten Medicaid pot to silence dissent on Trump’s ‘big, beautiful bill’

      June 25, 2025
    • Judicial nominee shuts down ‘wildly inaccurate’ claims that he’s Trump’s ‘henchman’

      June 25, 2025
    • Tesla’s European sales fall for a fifth month in a row

      June 25, 2025
    • World leaders flock to meet with Trump at NATO Summit

      June 25, 2025

    Categories

    • Business (8,314)
    • Investing (2,072)
    • Politics (15,806)
    • Stocks (3,168)
    • About us
    • Privacy Policy
    • Terms & Conditions

    Disclaimer: futureretirementsuccess.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2025 futureretirementsuccess.com | All Rights Reserved