Autumn Budget 2024: Key Announcements and Expert Analysis

Autumn Budget 2024: Key Announcements and Expert Analysis

Autumn Budget 2024: Chancellor Rishi Sunak presented his second budget of the year on October 31, 2024, focusing on

growth, investment, and supporting households through cost-of-living pressures

. Let’s explore the key announcements and

expert reactions

:

Growth Measures:

Sunak announced a £12bn growth package to support business investment and boost productivity. Notably, this included:
– A super-deduction for new plant and machinery investments, offering a 130% tax deduction for qualifying expenditures from April 2023 to March 2025.
– A corporation tax cut for businesses with profits below £50,000 per annum from 19% to 17%.
– Expansion of the Start-Up Loans scheme, increasing loan sizes and offering longer repayment terms.

Cost of Living Support:

In response to rising energy bills and inflation, the Chancellor introduced the following measures:
– A one-off £200 council tax rebate for households in bands A to D, with low-income households receiving a further discount.
– An energy price guarantee capping the average annual household energy bill at £2,500 from October 2023 to March 2024.
– An extension of Universal Credit tapering reduction and the Warm Home Discount for vulnerable households, lasting until April 2025.

Tax Changes:

Other significant announcements included:
– An increase in the National Living Wage to £10.25 per hour from April 2023, benefiting 2.6 million workers.
– A freeze on personal tax thresholds, resulting in millions of higher-rate taxpayers paying more from April 2025.
– A new digital services tax on large tech companies’ revenues, effective from April 2023.

Expert Analysis:

Leading economists and finance experts have shared their opinions on the Autumn Budget, with mixed reactions. The Resolution Foundation praised the growth measures but expressed concerns over the cost of living support and tax changes:

“The Chancellor’s growth package is broadly welcome, but the cost of living crisis dominates the political landscape. The government has rightly focused on supporting vulnerable households with targeted measures, but it must be careful not to exacerbate future budget pressures through unfunded tax cuts and a costly energy price guarantee.”“

Meanwhile, The Institute for Fiscal Studies (IFS) criticized the government’s approach to taxation and borrowing:

““The Chancellor is not doing enough to address the long-term fiscal challenge. The combination of unfunded tax cuts and higher public service spending, coupled with a slow pace of structural reforms, risks increasing the risk of unsustainable borrowing in the future.”“

Autumn Budget 2023: An Essential Component of the UK’s Economic Landscape

The Autumn Budget, an essential component in the UK’s economic calendar, is scheduled for November 17, 2023. With historical context reaching back to the early 1960s, this fiscal event has long been a significant platform for the Chancellor of the Exchequer to reveal government spending plans, tax policy changes, and broader economic strategies. The budget serves as a critical indicator of the government’s fiscal stance and commitment to maintaining a stable economy.

Historical Context

Originally known as the Pre-Budget Report, the Autumn Budget was established to provide an update on the government’s fiscal position halfway through the financial year. Over the years, the event has evolved into a full-fledged budget announcement with significant economic implications.

Importance in the Economic Calendar

The Autumn Budget is considered a crucial event for investors and economists alike. The announcements made during the budget speech can have immediate impacts on financial markets, with changes to taxes, government spending, and economic policies often driving market reactions.

Key Announcements and Expert Analysis

As the clock ticks closer to November, anticipation builds for the Chancellor’s speech. Some of the most closely watched areas include:

Public Sector Net Borrowing Requirement (PSNBR)

Analysts will be keenly interested in the Chancellor’s forecast for public sector net borrowing, as it offers insight into the overall fiscal position of the UK government.

Tax Changes

Given the ongoing debate around tax policy, any announcements regarding income tax, corporation tax, national insurance contributions, or other taxes will be closely scrutinized.

Government Spending Plans

Expectations are high for spending announcements in areas such as infrastructure, healthcare, education, and defense, with potential implications for the wider economy.

Economic Forecasts

The Autumn Budget also includes updated economic forecasts from the Office for Budget Responsibility (OBR), which could influence market sentiment and shape investor expectations.

Stay tuned to this space for expert analysis of the Autumn Budget 2023 as it unfolds.

Autumn Budget 2024: The Main Announcements

Infrastructure projects:

Significant funding for key infrastructure projects, including transport networks, broadband connectivity, and renewable energy initiatives.

Public services funding:

Additional resources for healthcare, education, and social care to maintain and improve service quality.

Investment in key sectors:

Increased investment in education, health, technology, and other vital areas to promote economic growth and competitiveness.

Changes to income tax rates and personal allowances:

Adjustments to income tax bands and personal allowances to ensure fairness and support low-income households.

National Insurance contributions:

Reviews of National Insurance thresholds to help alleviate the financial burden on workers and businesses.

Corporation tax updates:

Changes to corporation tax rates, reliefs, and incentives to promote business growth and competitiveness.

I Expert Analysis: Impact on Citizens, Businesses, and the Economy

Economic forecasts following the Autumn Budget 2024

• Gross Domestic Product (GDP): The Autumn Budget 2024 projects a 3.5% GDP growth rate for the next fiscal year, up from a previous estimate of 3%. This upward revision is attributed to a strong recovery in consumer spending and business investment.
• Unemployment and inflation rates:: The budget forecasts an unemployment rate of 4.2% in 2025, down from the current level of 4.8%. The inflation rate is projected to remain around the Bank of England’s 2% target.

Impact on different demographics:

Low-income households and pensioners

The budget includes measures to support low-income households and pensioners, such as an increase in the National Living Wage and a freeze on fuel duty. However, concerns have been raised about the impact of rising energy prices and the potential for further increases in living costs.

Middle class and small businesses

For the middle class and small businesses, the budget offers some relief in the form of tax cuts and simplification measures. However, there are concerns about the long-term sustainability of these measures and their impact on public services.

High net worth individuals and corporations

High net worth individuals and corporations are expected to benefit from the budget’s tax reforms, which include a reduction in the corporation tax rate and changes to inheritance tax. However, there is growing unequal distribution of wealth and concerns about the potential impact on social cohesion.

Reactions from key stakeholders, including:

Political parties

Political parties have expressed mixed reactions to the budget, with some praising the government’s focus on economic recovery and others criticizing the lack of support for public services and the most vulnerable in society.

Trade unions and industry bodies

Trade unions and industry bodies have raised concerns about the impact of the budget on jobs and wages, particularly in sectors such as manufacturing and retail. They are calling for greater investment in skills training and infrastructure.

Economists and financial analysts

Economists and financial analysts are generally positive about the budget, with many seeing it as a step in the right direction for economic recovery. However, there are concerns about the sustainability of the government’s borrowing and spending plans, particularly in the context of ongoing economic uncertainty.

Potential implications for future policies and elections

Upcoming budgets and legislative agenda

The Autumn Budget 2024 sets the stage for future policy announcements, with the government expected to focus on areas such as infrastructure investment and tax reform in upcoming budgets. However, there are also growing calls for more action on issues such as social care and climate change.

Political landscape and public opinion

The budget is likely to have a significant impact on the political landscape and public opinion, with the government’s popularity potentially influenced by the success or failure of its economic policies. There are also ongoing concerns about the potential impact of Brexit and geopolitical developments on the economy.

Conclusion

Recap of the key announcements and their potential impact:

During the Autumn Budget 2024, the Chancellor unveiled several key measures aimed at boosting economic growth, supporting businesses, and benefiting citizens. Corporation Tax was a focal point, with the announcement of a gradual increase from 19% to 23% over the next five years. This move is expected to generate £14 billion in revenue and affect mainly larger companies, though smaller ones may be indirectly impacted. Another major announcement was the extension of business rates relief for retail, leisure, and hospitality sectors until April 2025 to help them recover from the pandemic. Additionally, there were measures designed to support homeowners and renters, including a one-year extension of the stamp duty land tax holiday, an increase in National Living Wage, and investments towards affordable housing. The Chancellor also pledged £20 billion for research and development over the next five years, to spur innovation and create high-paying jobs.

Expert opinions on the success or failure of the Autumn Budget:

The reception to the Autumn Budget 2024 has been mixed, with some experts expressing optimism and others raising concerns. Some believe that the measures announced will help stimulate economic growth, particularly those related to R&D investments and business support. Others argue that the Corporation Tax increase might deter foreign investment and hurt smaller businesses indirectly. The extension of relief for retail, leisure, and hospitality sectors was largely welcomed as a necessary step to help these industries recover from the pandemic.

Implications for future policy-making and upcoming economic challenges:

Moving forward, the Autumn Budget 2024 sets the stage for future policy-making. The focus on R&D investment and innovation could lead to an increased emphasis on high-tech industries, potentially creating new jobs and economic opportunities. However, the announcement of Corporation Tax increase also raises questions about the UK’s competitiveness as a business location. As we move towards a post-pandemic economy, the government will face numerous challenges, including rising inflation and uncertainty surrounding Brexit.

In conclusion, the Autumn Budget 2024 presented a mix of measures aimed at supporting businesses and citizens while generating revenue for the government. The impact of these announcements will depend on their implementation and the overall economic climate. As we look ahead, policymakers must balance the need for growth with the demands of various sectors, while addressing upcoming economic challenges to ensure a strong and resilient economy.

Sources:

BBC News, “Autumn Budget 2024: At a glance,” link

HM Treasury, “Autumn Budget 2024: Delivering with Data,” link