Billed as a ‘Budget for growth’ by the Chancellor of the Exchequer, Jeremy Hunt, the spring Budget of 2023 aimed to raise confidence in the economic outlook for the remainder of 2023 and beyond among business leaders and employers. But did it achieve its objectives?
In short, the answer is yes. The Chancellor began by saying that we must “remain vigilant” on the economy. He assured businesses that the UK will not enter a “technical recession” this year and while the economy will see a -0.2 percent dip between now and December the focus is very much on what will come in 2024.
Indeed, the Office for Budget (OBR) Responsibility has predicted that the economy will grow by 1.8 per cent and 2.5 per cent in 2024 and 2025 respectively. Inflation will also move in the right direction too, with the Government committed to seeing this fall from 10.7 per cent last December to 2.9 per cent by the end of 2023.
In addition, the Chancellor has set an ambitious target of helping to support the creation of an additional one million new businesses next year and the year after. This is welcome news and a strong signal both of intent and confidence that the current Government has.
Central to this, he said, will be the establishment of 12 new investment zones that will help stimulate the regional economy and further cement the UK’s position as “the third best country in the world to invest in.” Each of these zones will be heavily focused on developing what the Government believes to be ‘key future sectors’ – green industries, digital technologies, life sciences, creative industries and advanced manufacturing.
The headlines, though, were dominated by the provision of new fully expensed childcare support. Spiraling childcare costs have meant that many parents have been prevented from re-entering the workforce or increasing their hours. The Chancellor confirmed that the existing funding will be increased and that support will now be available for parents from when their child is nine months old for the first time. This is a significant measure that will likely boost the number of people entering the workforce and increasing their participation in the labour market.
There are currently over seven million people of working age who are not in employment, many of whom are aged over 50 years. By expanding its Skills Bootcamps and the introduction of so-called ‘Returnships’, the Government hopes that by up-skilling and providing additional support they will boost the number of over 50s opting to become economically active once again.
Whilst falling a tad short of being radical or transformative, taken into context the key changes outlined by the Chancellor are very much focused on delivering mid- to long-term, sustainable growth. So, in that sense, we would suggest that the Budget was ‘modest’, but still very much welcome nonetheless.
The OBR has forecast that UK growth will be higher than previously expected, and they assert the Chancellor’s new policies have resulted in “the largest upward revision we have made to potential output within our five-year forecast as a result of fiscal policy decisions taken by a government in any of our forecasts since 2010”.
This does give us cause for optimism. The economy has avoided a recession and while we have yet to see any sign of the big bounce back that was predicted at the start of 2021, we look set to enjoy a growth that is slower but steadier. After a prolonged period of ups and downs, a couple of years of relative calmness and predictability is perhaps the preferred choice for many business leaders right now.